feedback

21 November 2013 Protecting business IP and data assets - Social media at work

By Tim Hemingway, Partner


In Brief

Social media tools like LinkedIn can facilitate the portability of customer information from one employer to the next, putting the spotlight on traditional thinking around employee obligations in respect of confidential information. In this piece, Tim Hemingway looks at a recent UK decision which, amongst other things, had to deal with this very conundrum.


The relative novelty of social media as a business tool has so far provided us with little case law guidance on how these new media are, inadvertently or otherwise, potentially changing the character of one of the classic species of business confidential information, the client list, especially when employees decide to move from one employer to another.

The recent England and Wales High Court decision in Whitmar Publications Ltd v Gamage & Ors [2013] EWHC 1881 involved a classic, though poorly executed, team move by some senior employees of Whitmar Publications Ltd (Whitmar) to set up their own, competing business, Earth Island Publishing Limited (Earth Island).

Whilst the decision generally turned on the 'traditional' principles of employee duties of good faith and confidence, it is interesting because it demonstrates what a powerful tool confidential information can be in circumstances where the relevant employees' contracts of employment contained no relevant restraints and, just to bring things into the 21st century, it throws into the mix some social media in the form of Whitmar's LinkedIn accounts and some questionable conduct by Whitmar's employees.

The facts

Whitmar had been in operation since 1988 and had a well established printed publications business with a stable of prominent titles. Three senior employees (a sales manager, a senior editor and a production editor) all resigned on the same day in late 2012. They were put on gardening leave and their employment terminated with effect from late January 2013. Immediately thereafter, they all started work at Earth Island, a competitor - which they themselves had established, it turned out.

On discovering that the three had taken a number of significant steps to set up the new venture whilst still employed by Whitmar and had also attempted to solicit Whitmar staff and customers and made unauthorised use of Whitmar's customer information and circulation data, Whitmar commenced proceedings claiming (amongst other things) breach of confidence and seeking restraint of any further use of confidential information.

Pending commencement of those proceedings, Whitmar also sought interlocutory relief (given the serious impact of their potential continued use of its information and some of the behaviours Whitmar had uncovered), including orders restraining further use of the information and 'springboard' relief on the basis of the unfair advantage which Whitmar claimed use of the information would bring. The interlocutory judge found that Whitmar had a strong case and would likely succeed at trial and granted the relief sought.

The evidence

The defendants claimed that they decided to resign and set up elsewhere because of closure of a major title which they all worked on. However, the evidence revealed that quite independently of that closure decision (in which decision the sales manager was actually involved!) and before they had resigned, they had already taken some significant steps to set up their new business, including making attempts to solicit Whitmar clients and using Whitmar's corporate LinkedIn accounts to promote their new business, including using customer contact information from those accounts to invite Whitmar customers to the Earth Island launch! Significantly, the senior editor (whose role also included management of the company's LinkedIn accounts) also refused to disclose the user names, password and other access information for those accounts when requested, and continued to use them to promote the new business.

In other words, it was clear that the defendants had misused company information and had taken significant preparatory steps whilst still employed by Whitmar, contrary to their duties of good faith and confidence to their employer. The judge awarded the relief even in the absence of any relevant restraints (such as non-compete, non-solicit, non-poach or no-dealing restraints) in their employment contracts (such as they were).

The decision is interesting in that it considers the fundamental freedom that employees have to practice their livelihood and move from one employer to another or even set up on their own account, (including taking preparatory steps to do so), subject only to employee duties of good faith and confidence, contractual restraints and other duties and obligations at law (such as duties of confidentiality and not infringing intellectual property rights).

Significance, practical considerations and questions

The decision is useful not only as a reminder of the just how powerful duties in the employment context are as tools for the protection of valuable business information, but also as a platform for consideration of the impact that social media can have on those duties.

Social media are now part of the workplace and do have an impact on the employment relationship and ultimately on a business' reputation – think about things like consistency of profiling, revelation of customer information and the semi-publicity of what could be unintended messages.

Now is the time to look at your employment contracts and policies and your management of your business' and your employees' social media accounts to make sure your business is properly prepared to make best use of these media and to deal with movement by social media savvy employees. This includes revisiting the way non-compete/non-solicit type restraints are drafted and thinking about how they will work in practice, for example to deal with things like updates generated automatically by a medium like LinkedIn which will notify a person's contacts when the person updates their profile regarding a change of employment.

For further information, please contact:

Richard Ottley, Partner  |  Phone: +61 2 9233 5544  |  Email: rbo@swaab.com.au

If you would like to republish this article, it is generally approved, but prior to doing so please contact the Marketing team at marketing@swaab.com.au

This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

Back to publications
Association Memberships
Tristan Jepson Memorial Foundation
  • 2015 - Finalist Lawyers Weekly Women in Law Awards
  • 2015 - Finalist Lawyers Weekly Australian Law Awards - Employee program of the year