Protecting confidential information - a welcome clarification from the Court

Businesses are often faced with the difficult position of employees leaving who may be in possession of confidential material and trade secrets. There is a risk that current or former employees (and/or directors) may seek to use that material to their advantage, for example, by competing with their former employer.

When faced with that scenario, a business will seek to rely on the employment contract, which will (if well drafted) forbid the use of confidential information and require it to be returned at the end of employment. The common law also provides some protection, allowing for an equitable claim of “breach of confidence” which does not strictly rely on a contractual term.

The case of 'Weiss Technik UK Ltd and others v Davies and others [2022] EWHC 2773 (Ch)'

The High Court has provided some welcome clarification in this area and confirmed that a claimant business (the victim of a breach of confidence) does not need to demonstrate that it has suffered “positive harm” as a result. Previous authorities suggested that a business would need to prove that confidential information had been taken, had been used in competition, and its use had caused loss and damage. That was often a difficult hurdle to overcome and would mean a business was put to significant expense and risk to establish the facts necessary to prove loss.However, in Weiss Technik, the Court provided some helpful clarification, deciding that:“If the defendants have deliberately and surreptitiously obtained, copied and stored the claimants' confidential information for the purposes of a competing business, in circumstances where the defendants knew or should have known the information to be confidential, that is sufficient to establish a breach of confidence as an equitable claim. It is not necessary to show that the defendants have specifically used the material in their business, or that the claimants have suffered loss and damage as a result.”This decision will be welcomed by businesses seeking to protect confidential information and its misuse by employees. It will help in cases where information has been disclosed to a third-party (say a competitor), but there is no direct evidence of it being used (yet).

How can Freeths' Dispute Resolution team help?

Freeths regularly act for businesses which have been affected by the wrongful taking of confidential information, securing injunctions and succeeding in claims for damages at the High Court. We work closely with IT experts at the investigation stage to secure the strongest evidence possible is obtained, and can advise on all issues, including employment law, intellectual property rights and other claims.If you have experienced a loss of confidential information and/or suspect employees (or former employees) of taking or retaining that information, we are able to assist.Please contact Richard Coates, Louise Wilson or Michael Hoskins for a confidential discussion.