Laying down the law

Laying down the law Martin Fleetwood

Protecting a Business's Confidential Information

A number of recent news reports have observed that there has been a steady improvement in the jobs market since the start of the year

With this positive employment background and the current trend of rising inflation, there are an increasing number of employees now looking to either negotiate a significant pay increase or move jobs in an effort to get a higher salary. Given its constituent parts, this is not a phenomenon that the rail industry is immune from.

When an employee, who as part of their job has had access to confidential information, moves on, are the company's controls strong enough to prevent some of that confidential information leaving with them? If the employee does leave with some confidential information, how easy is it for the company to demand its return – including all copies which may have been made?

Heading Some helpful guidance can be found in the relatively recent case of Nissan Motor (GB) Limited, Nissan Motor Co Ltd (collectively referred to as Nissan) v Ravinder Passi. Mr Passi was employed by Nissan as Global General Counsel between 2012-2020. On his departure from Nissan, Mr Passi was asked to return any Nissan confidential information in his possession. Mr Passi's employment contract also contained certain obligations which survived the termination of his employment that related to returning confidential information.

Shortly after leaving Nissan, Mr Passi started Employment Tribunal proceedings against the company claiming that he was a whistle blower whose employment had been unlawfully terminated. During the course of those proceedings, Mr Passi relied upon numerous documents containing Nissan's confidential information. This was information that Mr Passi had failed to deliver up on his departure, despite being asked to do so.

Nissan made an application to the High Court for interim injunctive relief against Mr Passi to recover all of its confidential information. Nissan contended that Mr Passi did not have the right to hold that confidential information and that he was obliged to deliver up the documents and destroy any copies that he retained upon the termination of his employment, owing to the express terms of his employment contract.

In response, Mr Passi admitted that he removed documents, gave them to his solicitors and retained them for his own use. He said he did this for the purpose of taking legal advice in his Employment Tribunal claim and whilst he would be content to deliver the original documents up, he wanted to retain copies of them. Nissan argued this attempted justification was inadequate in both fact and law.

High Court's decision In considering Nissan's application, the High Court applied the well-established three limb test for granting an interim injunction set out in the 1975 case of American Cyanamid Co v Ethicon Ltd. The court found that: 1. There was a serious issue to be tried:

There was a clear argument that the documents retained by Mr Passi were the property of Nissan and contained confidential information, some of which was legally privileged. 2. Damages would not be an adequate remedy: Any later cash payment would not provide sufficient compensation for the effects of disclosing the confidential information on Nissan's business. 3. The balance of convenience lay with

Nissan: Nissan had a strong position regarding ownership and entitlement to the document. This was strengthened because Mr Passi had retained documents without Nissan's knowledge contrary to the express provisions in his employment contract.

The Court concluded that all the documents should be returned to Nissan and any copies that Mr Passi or his lawyers had retained should be destroyed. This would not prevent any application for disclosure of documents through the normal disclosure process for legal cases but a key issue was to discourage employees simply taking confidential documents that they considered may be helpful in any employment tribunal claim.

Alongside its decision on the application for the injunction, the High Court also provided some useful additional guidance on confidentiality. • The confidentiality of documents was not lost if they were read or referred to in open court.

• A clear definition of ‘confidential information’ is essential – particularly if using court processes to protect that information. Open-ended definitions cause practical difficulties and uncertainty as to what should be included.

Implications for businesses In order to secure its confidential information from being retained by a departing employee, a business needs to: • Use well-drafted, clearly expressed contractual clauses which accurately define what is classed as confidential information in the context of the business in question. • Ensure there are clear obligations on the respective parties relating to the confidential information, both during the relationship and more importantly, after it ends e.g. Obligations to return company property and to permanently delete company documents. • Communicate clearly with employees to ensure that confidential information is returned or destroyed when the employee leaves and monitor such compliance. • Take action to secure its confidential information if an employee fails to comply with their obligations to return

all confidential information, including, where necessary, via an application to the courts for interim relief. • Be able to show in any interim injunction application clear evidence of the effects on its business were the confidential information to be disclosed in open court or more widely.

It should be noted, however, that the ability to define information as being ‘confidential’ will not always be sufficient to protect it from disclosure. Certain exemptions apply under legislation to protect whistle blowers – an argument that Mr Passi tried to use in his case against Nissan. Ultimately it may need the court to decide whether confidential information should be protected, but a business can go a long way to reducing the risk of disclosure, particularly if the employee's intention is mainly to help them at their new employer.

TBM Ad

the ability to defi ne information as being ‘confi dential’ will not always be suffi cient to protect it from disclosure. Certain exemptions apply under legislation to protect whistle blowers

Martin Fleetwood is a Consultant at Addleshaw Goddard’s Transport practice. The Rail Team has over 30 lawyers who advise clients in both the private and public sectors across a wide range of legal areas. As well as contractual issues, the team advises on operational matters, franchises, concessions, finance, regulatory, property, employment, environmental and procurement issues.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

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