What can you do if an ex-employee steals confidential information?

Current as of July 2017

 

We all hope that this will never happen to us, but if it does what are your rights as an employer?

It can be difficult to prove due to the digital nature of modern day information. However, if an employer can prove an employee has stolen confidential or copyright material, then the court has supported the employer where the ex-employee’s behaviour is deceitful or easily replicated.

Section 183(1) of the Corporations Act states:

  1. A person who obtains information because they are, or have been a director or other officer or employee of a corporation must not improperly use the information to:
  • gain an advantage for themselves or someone else; or
  • cause detainment to the corporation

In addition to this Corporation Act section, sections 115 (1) and (4) of the Copyright Act provide additional support to the employer for obtaining damages against an ex-employee.

In the case of SAI Global Property Division Pty Ltd v Johnstone (2016) FCA 1333, SAI Global brought an action against Mr Johnstone (an ex-employee) for breach of his fiduciary duties under s.183 and also for damages for breach of copyright under s. 115 (4).

SAI Global was unable to establish any injury caused by Mr. Johnstone’s actions as a breach of s.183 and were awarded damages of $1. However, they were also awarded $5,000 in additional damages for breach of s. 115 (4) of the Copyright Act as the information stolen was the subject of copyright.

 

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This newsletter has been produced by Stanley & Williamson as a service to its clients and associates. The information contained in the newsletter is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this newsletter, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under Professional Standards legislation.