Today, a few companies can boast that they never had cases of confidential information disclosure. There are many situations where these violations occurred on the part of the company’s former employees.
What unjustness! You hire an employee, teach him everything, share your exclusive best practices. And then the employee leaves with half of your customers and opens a business exactly like yours. Is it possible to insure yourself against such a blow?
The IQ Decision UK team has prepared this material for you to better understand how to protect trade secrets and what to do if a former employee has violated trade secrets.
Situations when employees take customers away and take advantage of the company's achievements, while revealing trade secrets, often happen and cause a storm of emotions in the owner. This is the feeling that you were betrayed. And the desire to punish the villain and restore justice. And the fear of losing business. It is easy to make the wrong decision on emotions and aggravate the situation.
Managers take for granted that the company's achievements and customer base are the property of the company, and do not explain this to employees. And the employees ascribe all the merits to themselves and think that they won’t be anything if they take “their” clients and start working for themselves.
It must be understood that most employees who encroach on the customer base and intellectual property of the company (databases, computer programs, inventions, know-how, trademarks developed by the company) are not villains. When they got a job, they had no plan to steal your business and somehow harm you. Just in the course of work, a suitable situation happened.
Case in Poland
After she was fired, a former employee of a Polish company registered her communications service company. The former employer sued her. The reason for the lawsuit was as follows:
- cooperation with the plaintiff’s client - a foreign company (hereinafter - the client) is contrary to the law and moral principles;
- violation of the trade secret of the plaintiff by providing the client with consulting services in the field of communications.
When hiring, a former employee made a contractual obligation to comply with the company’s trade secrets, including all information relating to potential customers. The employee had to fulfill the obligation to protect confidential information during the term of the employee’s labor contract and one year from the date of its termination or expiration.
However, while on maternity leave, the employee received information from the client (at that time the client was still her employer’s) that the company wants to stop cooperating with the plaintiff and open a company in Poland in order to provide the same services that were still provided by her employer.
Soon after, the employee quit and established a company in Poland, which was funded by a client.
A lawsuit against a former employee
The company filed a lawsuit against the former employee and requested:
- payment of losses for violation of trade secrets and the establishment of illegal commercial relations with a client;
- payment of lost profits;
- posting on the company's main website an apology for allegedly illegal acts committed to the detriment of the plaintiff.
However, to the plaintiff’s surprise and disappointment, neither the district court nor the court of appeal shared his point of view. And here are their arguments:
- the reason for the termination of cooperation between the plaintiff and the client was not due to the defendant;
- establishing cooperation of the client with the company of the former employee was not the reason for the termination of the cooperation of the plaintiff with the client, but rather its consequence.
Deciding to appeal the court decision in Poland, the plaintiff filed a cassation appeal, and the case was referred to the Supreme Court.
Supreme Court Decision
The Supreme Court of Poland clarified that cooperation between the company of the former employee and the client (even if it was the former plaintiff’s client) as a whole cannot be prohibited. If there is an illegal element in the cooperation of the defendant and the client, then this is the potential use of the trade secret of the plaintiff.
During the contract period, the employee took steps to build relations with the client, which led to the registration of the Polish company which provided services to the client.
The decision was made that the burden of proof would be shifted to the former employee who allegedly revealed the trade secret. So now the former employee is obliged to prove that the information transmitted to her company during the liaison with the former client of the plaintiff is not a commercial secret.
It is important to note that the formation of trade secrets does not include the data that interested parties can obtain during the normal and legal conduct of business in Poland.
Protection of business information
If an employee has worked for a long time in the company, gained experience, led clients, and then quit and opened the same business as yours, you cannot stop him. If your customers want to go to him, you will have to fight for them, as with any other competitor. But if an employee copies, for example, a database and this fact is fixed by a special program, you can claim damages and even bring him to criminal liability.
Instead of an epilogue
We brought this case because it to some extent explains some methods of protecting entrepreneurs from unauthorized disclosure of trade secrets by former employees. Of course, the best way to stop this practice is to hire loyal people and build honest and mutually beneficial relationships with them so that they don’t have a desire to leave. But even under such conditions, not a single company is insured from unscrupulous employees.
If you encounter a similar problem, we suggest that you deal with it with the help of competent law professionals. Specialists of IQ Decision UK will assist in this matter during an individual consultation on the protection of the intellectual property of companies. We will be able to offer you specific methods and solutions how to protect a business from unfair competition.