Clarification on Confidential Information Protection for Employers
29 November 2022
Most employers will have some form of confidential information, be it customer lists, pricing information or technical data for their products and services. In the main that confidential information will be protected by confidential information provisions in the contract of employment. However, often such provisions are focussed on the ‘use’ of confidential information.
Where it is found that an employee has breached the provisions of their contract in relation to confidential information, then to pursue such a claim the employer will generally need to identify that they have suffered some harm and specifically a financial loss. This can often be difficult to establish where the confidential information is not being used for a loss-generating activity such as poaching customers.
In addition to express contractual protection, common law also provides protection over confidential information and trade secrets. The recent case of Weiss Technik UK Ltd and other v Davies and others in the High Court in England has provided some useful clarification of existing case law.
The case concerned four former employees of the company who copied confidential software and customer database information. This was to be used by a new company that had been set up by one of the former employees. The four former employees all had confidentiality clauses in their contracts of employment. Importantly, the information had not actually been used by the new company.
The High Court determined that the mere fact that the new company retained the confidential information was enough for the claim to succeed. It was not necessary to prove that the confidential information had been used or that Weiss had suffered a loss.
The implication of the Weiss case is that the mere copying of confidential information for the purposes of a competing company may be enough to establish a breach of confidence as an equitable claim. It may not be necessary to prove the use of the confidential information or even loss or damage.
This decision will be a helpful case to have in the armoury of employers seeking to enforce the theft of confidential information. It is however important to note that information will need to be deemed to be truly confidential to acquire protection. In this case, the information was in the form of software and a database which attracted other protections such as copyright and database rights.
This article is for general guidance only and should not be regarded as a substitute for professional legal advice.