Protecting Your Business and Your Confidential Information
Some businesses have a unique method or something special about what they do that sets it apart from their competition. It might not be a trade secret as good as the Coca Cola recipe, but businesses have information that they will want to protect whether it be a process, a business method, financial information or a customer list. This confidential information is capable of being protected from disclosure and misuse.
So how do you protect confidential information?
In a commercial arrangement between businesses, the parties may enter into a Non-Disclosure Agreement (sometimes referred to as an NDA for short) to protect the information exchanged between them. For example if a business is considering the possibility of entering into a joint venture and it wants to share key information with the joint venture partner. The NDA will limit the use of that information and when it should be returned. So many businesses provide important information to a third party without an NDA in place.
What about employees who know their employer’s confidential information?
Employees often have access to confidential information of a business. This may be the customer list of the business. In this modern era, a customer list can be rapidly removed by a rogue employee with a memory stick inside a minute.
Businesses need to be alive to this and ensure that they have appropriate policies in place to monitor the use of computer equipment within their businesses and also have appropriate restrictions within employment contracts for employees both during and after employment, and be ready to act if information is removed for improper purposes.
If a business uses a sub-contractor or a consultant, similar protections should be in place within the consultancy contract, expressly protecting the businesses’ confidential information.
What happens when employees leave?
Usually, the Employment Contract would prevent the use of confidential information after the employee leaves. The contract defines what amounts to confidential information and this will usually be wider than the law protects by certain implied duties. The contract may (and should) also include restrictive covenants about what the employee can do after leaving including their ability to work with the businesses customer base.
Unfortunately, many businesses do not think about these clauses until after the problem has arisen.
Tips for your Business
- Think about what confidential information you have and be sure that appropriate security is in place to protect that information and monitor how and when it is accessed, or shared with third parties. If you are sharing it, think about whether an NDA is required.
- Who needs access to your confidential information? Some staff may only need to have access to some of the information and not all of it. So limit access.
- Do your contractual arrangements with your employees and consultants provide adequate protections for your business? If not, get your contracts reviewed.
- If information is removed or you fear it is being misused, take advice and action promptly. In most cases, the best remedy for a business is to stop the use and disclosure of that information before it gets any further into the public domain or becomes used more widely. This can sometimes be through an application for an Injunction.
Businesses work hard to build up their confidential information from know how to customer lists, and should work just as hard to protect it. Our director, Greg Hollingsworth, is a litigation solicitor specialising in restrictive covenant disputes and protecting confidential information.