CONFIDENTIAL INFORMATION – LIABILITY OF NEW EMPLOYER
14 August 2013
Is copying your employer's Sage database and using it in the employment of a competitor actionable as a breach of confidence?
Yes, if the information it contains is actually used, according to the Patents County Court in Pintorex Limited v Keyvanfar .
Daniel Barnett’s Employment Law Bulletin summarises the case:
Mr Keyvanfar copied the Claimant's database and loaded it onto a laptop owned by his new employer, Parax Office Limited ('Parax'). Mr Keyvanfar then used the pricing information it contained to approach two of the Claimant's clients, and undercut the Claimant's prices. Parax was held to be liable for the breaches of confidence by Mr Keyvanfar, including those pre-dating Mr Keyvanfar's employment, on the basis that he was acting to further Parax's interests as Parax's agent, and that Parax had sufficient knowledge of what was going on to be jointly liable. The Third Defendant, the sole Director of Parax, could also have been jointly liable for the breaches had he had a 'common design' to commit them, or 'dishonestly' ignored what was going on, but it was held he did not know and so could not be jointly liable.
LATEST LINKEDIN CASE SETS LEGAL PRECEDENT
23 August 2013
In a recent case an employer claimed damages for breach of contract and for a permanent injunction restraining ex-employees from using confidential information obtained during their employment.
The three employees in this case Whitmar Publications Ltd v Gamage set up a business to compete with their employer some four months before resigning from their positions.
Whitmar contended that Gamage et al had misused Whitmar's confidential information. As well as mirroring circulation figures and some products, the defendants used the LinkedIn groups established under Whitmar to promote their new business. They also refused to provide Whitmar with the user name, password and all other access details for the LinkedIn groups. Business card details were also copied and contacts used for the competing business. Breach of contract Whitmar claimed that the former employees were in breach of their contracts of employment and of their obligations as employees and that the defendants were under an implied duty of good faith and fidelity, which continued until the end of their employment. It was also claimed that as two of the defendants were senior employees, they each owed fiduciary duties to Whitmar even though their letters of engagement did not specify this. The court was of the opinion that the critical distinction between the duty of good faith and fidelity owed by an employee and the fiduciary duties, is that an employee is not in the position of a fiduciary, such as a director. It is commonplace in law that a director owes fiduciary duties to the company of which he or she is a director, and is under a duty to act in good faith in what he or she considers being in the best interests of the company. An employee does not have such wide-reaching obligations.
CIPP Policy News Journal
16/04/2014, Page 110 of 519
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