Protecting Confidential Information of Employers
The Federal Court of Australia released a decision supporting an employer’s ability to protect its confidential information from unauthorised use by a former employee. In Prime Creative Media Pty Ltd. v Vranjkovic, [2009] FCA 1030 the court imposed an order restraining a former employee and her new employer from using the former employer’s contact list.
The former employer brought an application alleging that the employee had breached her common law obligation of good faith and fidelity, her obligation of confidence, the Corporations Act 2001 (Cth), s. 182 and 183 and the Copyright Act 1968 (Cth).
The former employer was a publisher and provider of marketing serves in the commercial road transport industry. It earned its income from activities such as selling subscriptions to its magazines, selling advertising space in its magazines and preparing graphic designs for websites.
The employee initially worked as a magazine editor and subsequently became a marketing and account manager. In the course of her work, the employee compiled a database of contacts she made in the course of her employment. The information was primarily gathered from business cards she had collected or from other information acquired in the course of her employment. The employer also built up its own master database to which the employee had access.
The employee resigned in September 2008. Subsequently the employer became aware that its former employee had been contacting several of its clients by email, indicating that she was doing consulting and public relations work on her own. The employer became concerned that the employee had retained a copy of its master database and requested that she return any electronic or hard copies of the database.
After working in a number of positions, the employee began working for a new employer who also published a magazine directed at the commercial road transport industry.
The court found that the information gathered by the employee was confidential in nature, even though the employer had never required her to treat the information as confidential during the course of her employment. The information at issue included mailing addresses, email addresses and telephone numbers of actual or prospective advertisers. The court found that it did not matter that this contact information could be ascertained without a great deal of additional work from other sources, such as the magazines themselves, the Yellow Pages, telephone directories or other organs circulating in the commercial road transportation industry. The court found that the information derived its confidentiality from its presence on a conveniently arranged list which was not readily accessible to persons other than employees.
The court made an order restraining the employee and her new employer from using for any purpose the list of names, addresses and telephone numbers appearing in the database compiled by the employee in the course of her employment. The court also ordered the appointment of an independent expert to examine any computers of the employee and her new employer for the purpose of identifying any information derived from the master database.
This case reaffirms the duties of confidence, good faith and fidelity owed by employees to their employers. Employers should also review their employment contracts to ensure they address employees’ obligations in relation to confidential information and intellectual property owned by the employer. Including these provisions can deter a former employee from engaging in unauthorised use of an employer’s confidential information. In addition, having contractual provisions in place provides an employer more options in the event an employee fails to comply with his or her obligations.
