Confidential Information: High Court grants order for inspection of ex-employee computers
Two employees left their employment with Warm Zones – a company specialising in delivering energy efficient measures and advice to domestic homes. Whilst the company was a not-for-profit entity, it operated in a competitive market and had collated commercial and proprietary information that would be valuable to any competitor.
After leaving Warm Zones, both employees went to work for a competitor organisation (“R”). Interestingly, as part of employment tribunal proceedings brought by one of the ex-employees against Warm Zones, emails came to light which suggested that both employees had disclosed confidential information to R whilst still employees of Warm Zones.
Specifically, the confidential information disclosed by the employees related to a database containing information about householders, which had been developed by Warm Zones at a substantial cost in terms of time, effort and confidential information belonging to it.
Warm Zones applied for an interim injunction against the ex-employees, seeking an order for the inspection and imaging of their computers.
The High Court granted the injunction in favour of Warm Zones. The following points were key to that decision: -
1) The fact that Warm Zones had spent significant resource in building the database and its evident commercial value (there was a serious question to be tried)
2) On the balance of convenience – damages alone would not be an adequate remedy for Warm Zones. Further, the injunction would not prevent the employees from working in their chosen fields – the order sought was “designed simply to secure the return, protection and security of Warm Zones’ confidential information”.
3) Warm Zones was to bear the costs of the independent expert to carry out the inspection and imaging of the computers
4) One of the ex-employees’ had initially agreed to have her computer inspected and had subsequently withdrawn the offer – calling her integrity into question.
Comment
This case is an interesting one for employers as it indicates a potentially useful tactic against an ex-employee who is suspected of misusing confidential information.
Employers should note the circumstances of this particular case when considering whether they may have a case for making such an application.
Finally, it is worth noting that the ex-employees in this particular case used and disclosed confidential information whilst they were still in employment. During employment, an employer is protected by an implied term of employment that an employee must not disclose trade secrets and confidential information, or use confidential information for their own purposes.
Post-employment however, the implied duty of confidentiality only protects the employer’s trade secrets (the employee is free to make use of all other information). Therefore, employers would be wise to protect itself via express provision in the contract of employment against use of confidential information post-employment, including defining precisely what “confidential information” means in relation to its own business.