Is your confidential information at risk?
Posted: 15th January 2019
Confidential information is the very lifeblood of many businesses and, if it is removed without authority by untrustworthy employees, it can be very hard to retrieve. As one case showed, however, judges have a range of emergency powers that can be used to ensure that the trail does not go cold.
A food wholesaling company launched proceedings after two of its senior employees resigned. They were alleged to have taken up employment with a competitor, one of them before the expiry of his notice period. It was also claimed that they had taken a great deal of the company’s confidential customer and pricing information with them and that, prior to their departure, they had acted fraudulently in diverting secret profits into their own pockets.
The company sought a pre-trial order requiring the former employees to deliver up any confidential information in their possession on their doorsteps. Concerned that the information could be deleted or destroyed if the men got wind of the proceedings, thus defeating the objective of the order, the company unusually did not give them prior notice of the application.
In ruling on the matter, the High Court noted that it had necessarily heard only one side of the case and that to grant such an order without notice was exceptional. However, there was clear evidence that the former employees had wrongfully taken copies of confidential information that the company described as its crown jewels.
There was also clear evidence that both men had acted fraudulently prior to their resignations and were either competing or preparing to compete with the company in breach of restrictive covenants in their employment contracts. There was good evidence that the potential damage to the company were the information to fall into the hands of a competitor would be very serious.
The men were likely to still have digital copies of the confidential information in their possession and the company had established a sufficient possibility of destruction to justify the grant of a doorstep delivery-up order. The order would not require the men to allow access to their homes or to submit to a search of their premises. They would also only be required to hand over electronic data, rather than hard copy documents, and the company and its lawyers would not be entitled to see the information retrieved without a further court order.