Increased protection against breaches of confidence by former employees

United Kingdom

Generally, it is regarded as difficult for employers to prevent former employees from using confidential information obtained in the course of their employment for their own or their new employer’s benefit, unless the information in question is a genuine trade secret. However, two recent decisions suggest that there may be new options for preventing the disclosure and use by former employees of general business information.

Legal background

It is well established that an implied duty of confidentiality exists between employees and their employers, which prevents the employee from using the employer’s confidential information for his own purposes. However, once the employment relationship is terminated, this duty continues only in respect of genuine trade secrets. General business information, such as customer and supplier information, can only be protected by way of restrictive covenants, which are difficult to enforce and which are only effective for a short period.

Sectrack NV v Satamatics Limited

An employee of Sectrack had left its employment and joined Sectrack’s supplier. The former employee had approached Sectrack’s customers with a view to supplying them direct. Sectrack had obtained an interim injunction preventing the former employee and his new employer from contacting its customers. At a further interim hearing, it applied to have the interim injunction extended until trial.

The information, which included customer names and contact details, had been “jealously guarded” by Sectrack, was not in the public domain and was not available on the Internet.

Relying on Lansing Linde v Kerr [1991], the Court held that the scope of “trade secrets” was wider than the traditional meaning of secret formulae and technical processes. It could include information: (i) which would be liable to cause real or significant harm to the owner of the secret if disclosed to a competitor; (ii) which is used in a trade or business; and (iii) of which the owner had limited dissemination, or at least not encouraged or permitted widespread publication. On that basis, there was a serious issue to be tried that the general customer information being used by the former employee and his new employer constituted trade secrets. The interim injunction was therefore extended until trial.

It was significant that the employee had not carried the information in question away in his head; it had remained on his computer after his employment had terminated. The judge was also concerned that the former employee had failed to make certain disclosures previously ordered by the Court, as a consequence of which the Court was unable to assess the nature and extent of confidential information still in the former employee’s possession. However, the point of general application is that the definition of “trade secrets” may be wider than usually thought.

Crowson Fabrics Limited v Paul Rider and others

After resigning from Crowson, two former employees had used the company’s e-mail systems to e-mail its customers about their new competing business and had removed a large number of documents containing the information including customer names and contact details, sales and profit figures, details of goods ordered by the customers and supplier details.

In addition to claiming that two former employees were subject to an implied obligation of good faith and fidelity, a duty of confidentiality, and a fiduciary duty (by reason of their senior positions), Crowson argued that database right subsisted in the business information in question and that the former employees had infringed these rights.

Database right subsists in databases (being collections of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means) where there has been a substantial investment in obtaining, verifying or presenting the contents of the database. A database right is infringed if a person extracts or re-utilises all or a substantial part of the contents of the database without the owner’s permission.

In sharp contrast with the Sectrack case, the Court held that such information was not confidential and that Crowson Fabrics could not prevent the former employees from disclosing or using it after their employment had ended, stating that the only information capable of being protected in this manner is a genuine trade secret. Here, the information in question was easily discoverable in the public domain, or was in the personal knowledge of the former employees.

However, the Court emphasised the need to distinguish between the obligation of confidentiality and the separate duty of fidelity owed by employees. Although the information was not confidential, and there was therefore no breach of confidence, by taking and retaining documents belonging to their former employer, both former employees were in breach of their duties of fidelity, and one was also in breach of his fiduciary duties.

The Court also held that the information held on Crowson’s computer system constituted a database and that, by extracting substantial parts of it, the former employees had infringed the company’s database right.


These cases show that, even where information being used by former employees is not traditional trade secrets and where there is no enforceable restrictive covenant, there are other avenues to protecting it. In particular, the novel use of database right to protect against disclosures by former employees is a significant development.

In light of these decisions, employers should take care to:

  • Ensure that they “jealously guard” their confidential information by controlling who has access to it and what copies are made of it, and making employees aware of the confidential status of the information and also of their confidentiality obligations.
  • Record the development of their database, in order to ensure that they can establish the necessary investment required for the database right to subsist.

Sectrack NV v Satamatics Limited (1) and Jan Leemans (2) [2007] EWHC 3003 (Comm);

Crowson Fabrics Limited v Paul Rider and others [2007] EWHC 2942 (Ch)