Social networking sites and confidential information

A recent application before the High Court focused on the tension between businesses encouraging employees to use social networking websites for professional reasons and later restraining the release of confidential information at the end of their employment. The Court ordered a previous employee of Hays Recruitment to provide pre-action disclosure of various documents relating to business contacts he had accumulated on a social networking site, LinkedIn, during his employment with the company. The case is likely to be of interest to employers concerned both about the strength of their confidentiality agreements and also their policies on the use of social networking websites at work.

Facts

The first respondent, Mr Ions, worked for the first applicant, Hays Specialist Recruitment (Holdings) Ltd ("Hays") for six and a half years, initially as a recruitment consultant and subsequently as a managing consultant. Mr Ions then decided to establish his own recruitment business (the second respondent in the action) in direct competition with Hays, which he made no secret of before leaving. Mr Ion's contract of employment with Hays included a clause that he was not to "make use of, or disclose or divulge" to any person or company confidential "trade secrets, business methods or information", unless necessary to properly carry out his duties. Mr Ions was also subject to a six month non-solicitation clause.

It was accepted by Mr Ions that he had uploaded the addresses of business contacts onto the professional networking site LinkedIn whilst employed by Hays, although he denied that: (a) the information uploaded was confidential; (b) he had unlawfully used it in his competing business; or (c) he had breached any restrictive covenants in respect of it. Mr Ions specifically argued that the migrating of business contact details to his LinkedIn network was done with Hays' consent, and that the site was a business tool similarly used by his colleagues.

Hays argued that the limited evidence available - evidence that it hoped to supplement through pre-action disclosure - demonstrated that Mr Ions was actively taking steps to gather confidential contact details whilst still employed with Hays, both uploading these details onto his personal LinkedIn network and encouraging Hays' clients and contacts to join him on the site, as a means of furthering his own personal business agenda.

Decision

The High Court determined that although there was little evidence which would enable it to weigh up the relative merits of the substantive arguments on both sides, it was satisfied that Hays had an arguable case against Mr Ions and that the test for pre-action disclosure under CPR 31.16(3) was clearly met.

The Court did, however, reduce the scope of the draft disclosure order put forward by Hays, which had requested "information" about Mr Ions business contacts, in addition to documents evidencing such contacts, and which had also requested a full copy of Mr Ions client database from the date he resigned from his employment to the date of the hearing.

The Court ordered the disclosure of documents evidencing the business contacts maintained by Mr Ions on the LinkedIn website since the time he resigned from his position. However, the Court found that disclosure of Mr Ions' entire database would amount to a "fishing expedition", and elsewhere drew a distinction between an order for the provision of information and an order for the disclosure of documents (only the latter of which could be valid).

Comment

It is notable in this judgment that there is no mention of Hays having a relevant internet use policy. It is not clear whether Hays did not have one or whether there was nothing in Mr Ions' conduct which could be said to have contravened it. If there was no relevant internet use policy, this is evidence of how indispensable social networking sites have become to certain companies and their employees.

The website in question, LinkedIn, has over 20 million registered users worldwide, and provides a platform that allows users to meet potential clients, subject experts, service providers and other contacts. Businesses can clearly reap valuable rewards by allowing their client-oriented employees to make use of such platforms

The key issue in this case is the question: at what point does confidential information of a business cease to become confidential? If an employee is allowed to share contact details of clients on a social network, does the information lose the quality of confidence as soon as it has been made accessible to other contacts? The nature of confidential information and the manner in which the law protects it sits uncomfortably with the nature and purpose of social networking sites.

The courts will inevitably deal with these very modern concerns for employers, if not as a result of this claim then elsewhere, and employers in due course are likely to have to make a stark choice as to whether they want to keep in place their rigid confidentiality clauses, and forsake the advantages afforded by employees' use of social networking sites, or dilute their confidentiality agreements to take the professional networking opportunities afforded by the internet.