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The protection available to a business for its know-how and confidential information can be implied or express. In addition to any express duties in their employment contracts, employees also owe their employers implied duties of confidence, fidelity and good faith. Employees who are also directors owe an additional fiduciary duty to act in the company's best interests. There are three specific categories of confidential information:- Trivial: information that, due to its trivial character or its easy accessibility from public sources, cannot be regarded as confidential. - Confidential: information that the employee must treat as confidential because: (i) the employee is expressly told it is confidential; or (ii) from its character it obviously is confidential. This information, once learned, necessarily remains in the employee's head and becomes part of the employee’s own skill and knowledge applied in the course of the employer's business. Generally, an existing employee can be stopped from misusing or disclosing this information but will not impose any implied restrictions on the employee’s ability to use or disclose it, even to a subsequent competing employer, after the employment ends.- Trade secrets: information that, by its nature, is highly confidential, for example, chemical formulae, designs or special methods of construction. The courts will imply terms to protect this against misuse or disclosure even post-employment. It is difficult to differentiate between "confidential information" and "trade secrets". When considering whether information is a trade secret, the nature of the employment and of the information itself will be considered. In other words, whether the employer impressed on the employee the confidential nature of the information and whether the relevant information can be easily isolated from other information which the employee is free to use and disclose. Information that has been held not to qualify as a trade secret but which was merely confidential has included the names and addresses of the ex-employer's customers, the most convenient delivery routes linking them, their preferred individual requirements, preferred days for their deliveries and prices charged to them and "internal" information about the alleged insolvency of the ex-employer company. Here are some considerations when drafting employment contracts or consultancy agreements: 1) it is advisable to include the employee’s job title, together with a description of the employees duties (this could be separate from the contract for example in a schedule and needs to be reviewed and updated regularly as duties change). 2) you should also clearly state who owns any intellectual property created or developed or any information, particularly where the employee is based outside UK or where rights relate to sound recordings, films and broadcasts; or where foreign rights are relevant and of course absolutely in case of consultants. There must also be an express obligation to disclose inventions to employer. 3) You must also deal with existing rights and future copyright for all commissioned works, particularly of copyright in drawings and models in commissioned designs (to be subject to local law, where appropriate) and include necessary waiver of moral rights. 4) Restrictive covenants appropriately tailored in terms of time, location and subject matter protected: not to disclose/use confidential information; not to solicit clients/employees; not to compete, including garden leave and payment in lieu of notice where appropriate. All articles are for general purposes and guidance only and do not constitute legal or professional advice. Copyright 2010 Anassutzi & Co Limited. All rights reserved. Information may be shared or reproduced only if accompanied by the author’s name and bio.
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