Trade Secrets

In these uncertain times safeguarding confidential or sensitive information is a major concern for most businesses. Key employees often have unique access to their employer's most sensitive information, and when those employees are made redundant or decide to look elsewhere for employment, there is always the fear that they will leave taking their employer's confidential information with them. In this article Graham Whitehouse, Employment Law Specialist at Pengillys LLP Solicitors of Weymouth and Dorchester answers some of the most frequently asked questions concerning the protection of confidential and sensitive information.

1.  Can I protect my business's sensitive and confidential information?

Yes.  Any trade secrets, sensitive or confidential information owned by a business, will be treated as that business's property and as with many other property belonging to the business, it may be protected from unlawful use.

2.  What information can I protect?

As a general rule you can protect any information that you consider to be confidential or sensitive in nature.  This right will not extend to any information that you have already put into the public domain, such as where it has been published in a brochure or in marketing materials, nor will the right extend to more generic information such as general customer lists or product details if that information is readily available elsewhere.  Any confidential or sensitive information that the business owns, that has not been placed in the public domain may be protectable.

3.  Can I stop an ex-employee competing with me once they have left my business?

No.  As a general rule confidential or sensitive information may be protected, however, you will not be able to prevent an ex-employee from merely competing with your business.  The only exception to this rule is where the ex-employee is competing with your business unfairly by making use of confidential or sensitive information obtained from you during the course of their employment.  In such a situation, you may be able to prevent the ex-employee from using that information or from providing that information to one of your competitors.

4.  How can my rights be protected?

Some items of confidential information such as special recipes or formulae are capable of being protected in their own right.  Where an item of information is clearly confidential in nature, and it has been disclosed in circumstances that would indicate that it is confidential, that information may carry with it an automatic right of protection and anyone attempting to use that information is doing so unlawfully.

For other information that you consider to be sensitive or confidential, but which may not carry an automatic right of confidentiality, such as pricing or customer details, you can protect that information by requiring all of your key employees to sign a Trust and Confidence Agreement.  The Trust and Confidence Agreement, may be incorporated within the terms of the contract of employment, or as a separate agreement.  The terms of the Trust and Confidence Agreement should stipulate what information you consider to be sensitive or confidential, and what restrictions you wish to place on the use of that information following the termination of the employee's employment with you.

Under the terms of the Trust and Confidence Agreement, following the termination of their employment, an ex-employee may be restricted from working in a specified geographical area and/or for a specified period of time, and even for a specified competitor.

5.  How can I enforce my rights?

Where you suspect that an ex-employee is attempting to use your confidential or sensitive information unlawfully, you should act as quickly as possible.  In the first instance you should write a letter to the ex-employee requesting that they confirm that they have not disclosed any of your sensitive or confidential information to any third parties, and that they have no intention of doing so in the future.  If you do not receive a satisfactory response, you may consider submitting an application to the Court for an injunction preventing your ex-employee from disclosing your information.  Your application to the Court may also include a request that a second injunction be granted against the ex-employees new employer preventing them from using any of your confidential or sensitive information.

At the same time, you should also request that the Court award you damages for any losses that you have suffered as a result of the actions of your ex-employee, together with an Order that the ex-employee and their new employer, deliver up any of your confidential or sensitive information still in their possession.

If these applications are successful, the ex-employee and possibly even their new employer, may be liable to pay all of your legal expenses.

Graham Whitehouse says "Protecting a business's confidential or sensitive information is a major concern for many employers.  Even where the correct protection documentation is in place, employers must be ever vigilant against ex-employees attempting to unlawfully use any information gained during the course of their employment.  Where an employer suspects a potential breach of their confidential information, they should act as quickly as possible to prevent any harm being done to their business."

For further information on any of the issues raised in this article, please contact the Employment Team at Pengillys LLP Solicitors on 01305 768888.