Key questions answered
Every business has information that it wants to keep private, whether this is customer lists, pricing strategies, the ingredients to a secret recipe or even the steps involved in a new and novel industrial process. But what happens where your privacy is breached, for example by a former employee who has decided to share commercially sensitive details about your business with one of your competitors? Is there anything that you can do to limit the potential fallout and where do you stand when it comes to seeking appropriate financial redress?
In this article we answer the key questions which arise when private business information is used or disclosed without your consent.
What potential remedies are available?
Depending on the circumstances, it may be possible for you to obtain redress in one or more of the following ways:
- by applying to the court for an emergency injunction in order to prevent your private information from being used or disclosed any further and, where appropriate, to ensure that any copies of that information are returned and that any products or goods unlawfully made or created in reliance on it are destroyed;
- by applying to the court for, or convincing the alleged wrongdoer to pay on a voluntary basis, compensation for any financial losses you have sustained, or to account for any profits that they have made at your expense; or
- by applying to the court for, or convincing the alleged wrongdoer to pay on a voluntary basis, compensation to reflect the licence fee or royalties that they would have had to pay to make lawful use of your information, assuming that this would or might have been an option.
Where you are aware that private information belonging to you has ended up in the hands of a competitor, but you are uncertain about how this occurred, it may be possible for you to apply for a disclosure order against your rival to help identify the culprit.
You may also be able to apply for a search order to help you locate and secure any relevant evidence where you can show that there is a real risk that this might otherwise be destroyed.
In what circumstances can I apply for an injunction?
It may be possible for you to apply for an injunction where you are able to prove, to the satisfaction of a judge, that:
- you have strong grounds for alleging that a breach of confidence has occurred which entitles you to seek appropriate redress;
- your interests are being, or are likely to be, prejudiced as a result of the breach; and
- an award of money alone, known in legal terms as ‘damages’, will not be an adequate remedy for the prejudice you have already suffered or are likely to sustain.
You may also need to prove that the balance of convenience dictates that an injunction ought to be granted. This will usually be possible where you can show that the harm caused to you if your application is refused would be greater than the harm caused to your opponent if your application were to be allowed, even where it may late transpire that the imposition of an injunction was not in fact justified.
What do I need to bear in mind with injunctions?
As injunctions are a draconian measure, serious consideration needs to be made before an application for an injunction is made because, either before or quickly after your application is made, you will need to issue a formal legal claim in respect of the breach of confidence that you allege has occurred. This subsequent claim could expose you to lengthy and expensive court proceedings, which are required so that the court can establish exactly what has happened and whether you are entitled to the redress claimed.
Given the serious nature of an injunction, you will also usually be expected to give what is known as a cross-undertaking in damages. This is in effect a promise to pay your opponent an appropriate level of compensation if it should later be established that granting of the injunction was not warranted.
You will in any event need to act quickly once a potential breach has been discovered, because time will be a relevant consideration for the court in deciding whether an application for an injunction should succeed. A delay of more than a few days (or possibly a couple of weeks in complex cases) could mean that your request for an injunction is denied.
Do I need legal advice to deal with a breach of confidence claim?
If you have been contemplating trying to deal with a breach of confidence claim yourself, then we would urge you to think again as this is an extremely complex area of law with many traps for the unwary or the ill-informed. There could also be serious financial implications if an incorrect application is made and it is later established that the injunction should not have been granted.
For example, unless your private information is protected via recognised and enforceable intellectual property rights, you will only usually have the ability to restrain the use or disclosure of information which can be categorised as confidential under UK common law, or which amounts to a trade secret under the 2018 Trade Secrets Regulations.
This means that you will generally only have the right to redress where:
For confidential information:
- the information you are seeking to protect has a quality of confidence about it, e.g. because it is known to only a few people, it has intrinsic commercial value and you have taken steps to ensure it remains private;
- you have shared or disclosed that information in circumstances which gave rise to an obligation of confidence, e.g. in circumstances where the recipient knew, or ought to have known, that the information was confidential and should therefore be kept private; and
- there has been actual or threatened unauthorised use or disclosure of that information which has or is likely to cause you detriment.
For trade secrets
- the information you are seeking to protect is secret, because it is not generally known or readily accessible;
- it has commercial value because of its secret nature; and you and anyone else lawfully in control of the information have taken reasonable steps to ensure that it remains classified.
Considering employment status
While an employee will be under an implied duty of confidence in respect of both confidential information and trade secrets while they are in your employment, their duty in respect of confidential information will usually lapse once their employment has ended unless:
- you have had the foresight to include post-termination restrictions in their contract; or
- you can prove that your confidential information was obtained by the employee while they were employed and is now being used by them to compete with you, or else it was stolen by the employee and is now being used to advance the interests of one of your competitors.
In the second scenario, you might be able to apply for a special type of injunction known as a ‘springboard injunction’ which is specifically designed to limit, or where possible eliminate, the advantage or head-start that an employee or one of your competitors might gain through the unlawful use of private information that rightfully belongs to you.
How we can help
We have extensive experience in dealing with breach of confidence claims, both through the instigation of court proceeding and via correspondence, negotiation, and professional mediation.
We understand how the rules governing the protection of confidential information and trade secrets work and can provide quick and comprehensive advice on whether a breach has occurred and if so what the appropriate rights of redress may be, based on your circumstances.
We have particular expertise when it comes to applying for injunctive relief. This includes asking the court to make orders to protect the ongoing privacy of your information during the course of the proceedings, e.g. by directing that the court file should be sealed, that hearings should not be conducted in public, and that an appropriate confidentiality agreement should be executed between you and your opponent.
To find out more about how we can help where a breach of confidence has occurred, whether you are a business whose information has been abused or a former employee, contractor or other third party accused of wrongdoing, please contact our Commercial Litigation Team on 01733 882800 or [email protected].
If you should require advice regarding how best to protect your position with new employees and the restrictions that can be placed in employment contracts then please contact our Employment Team also on 01733 882800 or [email protected].
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