Protecting confidential information from digital thieves

The digital age has made it easier than ever for departing employees to “steal” important information from their (soon to be ex) employer.

The nefarious USB allows employees to siphon off terabytes of digital records, including financial statistics, client details, and prices.

The New South Wales Supreme Court recently granted an interlocutory injunction against a former employee of DXC Connect (DXC), a provider of information communication technology services.¹  The former employee, armed with an armada of USBs, jumped ship to a market rival, taking with him sensitive information he downloaded from work computers.

The effect of the injunction prevents the former employee from disclosing or using information, specified by DXC, that was copied to the USBs.

The interlocutory hearing

A court will not grant an interlocutory injunction unless it is satisfied that:

• there is a prima facie case or serious question to be tried as to an entitlement to relief sought at a final hearing;
• damages would not be an adequate remedy; and
• the balance of convenience favours the grant of the injunction.²

Despite having some doubts over the validity of DXC’s claim that the information copied to the USBs was, in fact, confidential, the Court accepted that it was seriously arguable that the information had a degree of confidentially.

Further, the Court concluded that by downloading a “substantial amount” of DXC’s confidential information to USBs, there was a seriously arguable case for breach of confidence against the former employee.

As the Court determined that the balance of convenience warranted injunctive relief, DXC was successful.

Lavan Comment

As information travels fast in digital space, by the time a court hears a case of breach of confidence, the damage is often already done.

Applying for interlocutory injunctive relief can provide a temporary fix, pending resolution at the final hearing

As a general rule, information created by an employee in the course of their employment is the property of their employer. This information, which is often confidential in nature (such as client lists), can be critical to the success of that business.

Where injunctive relief can provide a temporary fix, best practice dictates reviewing employment contracts and internal policies to ensure an employee’s obligations of confidentially, both during and after the period of employment, are clear and enforceable.

Therefore, next time an employee goes rogue with a USB, you are in the best position to manage the threat.

If you need to discuss how best to protect your confidential information, please contact Iain Freeman.