Confidential information − avoiding the risks

Protecting confidential information and trade secrets from misappropriation is fundamentally important for businesses, particularly with ever increasing risks from social media and portable devices. Companies should also take care to implement controls to prevent the procurement of confidential information from competitors and any litigation that may arise as a result of taking on a new employee or director.  A three tiered approach could offer comprehensive protection for businesses and would seek to operate prior, during and on the exit of employment.  

Tier one: prior to employment 

The most important stage in preventing a business from acquiring a competitor's confidential information arises prior to employment where any agreements between a candidate and their current employer should be established.  A candidate should not be questioned about a competitor's confidential information during interview nor should any trade secrets be disclosed. If successful, a candidate's exit of their current employment should be straightforward and they should be encouraged to provide their employer with proper notice. An agreement should be drawn up emphasising that the company is not seeking to obtain confidential information from their new employee. The risk of breaching the law of confidence is heightened when employing senior or high-level executives and in correlation with this risk, due diligence procedures should be well reasoned and a detail plan prepared.

Tier two: during employment

During employment, protections should be introduced to prevent the misappropriation of confidential information by and from the business. Current employees should be provided with ongoing training to remain up-to date with evolving risks and requirements and IT measures should be considered to monitor information going in and out of the business. It is also sensible to create a preventative culture and ethos amongst staff that are actively aware that they must not to obtain confidential information from the businesses competitors.

Tier three: exiting employment 

The taking of confidential information and trade secrets by a previous employee is a common eventuality and as a result, the final level of protection should occur on the exit of employment. An exit interview should be conducted as soon as a notice is provided requiring employees to sign a final document reminding them of their ongoing obligations of confidentiality. Businesses should also implement steps to ensure all devices used during employment are returned as soon as practicable after notice has been provided.

A three-tiered approach to protection provides the initial building blocks to comprehensively protect against both the loss and procurement of confidential information.  The developing nature of technology and social media means that this area of the law will become increasingly challenging and employers should act fast to prevent the inevitable risks in failing to adequately protect confidential information. 

For further information please contact Alice Daniels, Solicitor in the Commercial & Regulatory Disputes team at Michelmores, by telephone on 01392 687534 or by email at alice.daniels@michelmores.com.