Protecting your confidential information when employees leave


Have you heard the one about the marble importer who quit his job and set up business in competition with his former employer? Well, it’s no joking matter, and a problem faced by employers on a regular basis. Read on to see how you can prevent getting caught between a slab of marble and a hard place.
The lesson from the case is that for an employer to be safe and to protect its confidential information, the employer will need to stipulate precise contractual covenants in the employment agreement, setting out both the information which is confidential and the parameters in time within which it may not be used.
In the recent case of Del Casale v Artedomus (Aust) Pty Ltd the Courts recently looked at the complex subject of what is confidential information and what must employers do to protect their confidential information.
Mr. Del Casale quit his job with Artedomus (Aust) Pty Ltd, an importer of fine Sicilian marble used in quality kitchens and the like. Artedomus had gone to great lengths to ensure that only senior, select personnel were aware of the source of the marble, Mr. Del Casale being included in this group.
When Mr. Del Casale began importing the same marble in connection with his own business, Artedomus sued for misuse of confidential information. The trial judge agreed with Artedomus and permanently restrained the defendant from using the confidential information and obtaining supplies of the marble for himself or others.
On appeal the Court considered all the classical authority on the subject of confidential information, and determined that Mr. Del Casale’s use of the confidential information was not a misuse that the Courts could protect - in the absence of a specific contractual obligation to not use the confidential information.
The Court found that it would be artificial to expect the ex-employee to undertake some exercise of trial and error to ascertain suppliers of good quality stone where the ex-employee already had knowledge of the source of the quality of stone he desired. In the absence of a specific contractual restraint, the Court was not prepared to impose an implied restraint.
Don’t let your business get caught in that proverbial place. Review your confidentiality and employment agreements regularly and make sure your valuable information is protected. If you would like any advice on these issues please do not hesitate to contact Townsends Business & Corporate Lawyers on (02) 8296 6222.