Using court injunctions to combat database theft

Tue, 11 May 2010 | By Ashkhan Candey, head of litigation/Matthew Tom, head of employment, at solicitors Candey

Your top recruiter, Sid, announces his resignation to find “a new challenge” outside of your market. You had the business foresight to ensure that before he joined you, he signed an employment contract containing carefully drafted and considered contractual restrictions which you remind him of before he leaves.

Some few weeks after his departure you notice that candidates that you ordinarily place are no longer on the market and your key client contacts are not doing the same volume of business with you.

Down the pub, your PA Julie meets up with Sid over a drink and he boasts about how much money he is now making as a director of his new company, New Street. Julie is thirsty and Sid is keen to show off his new wealth. Before long he has let slip that he is targeting your contacts.

The Evidence

You check your databases, Sid’s emails and his computer (in line with your company’s IT policy): Sid has copied your client and candidate database, your confidential strategy documents and whisked them out of the office by emailing them to himself, printing them off and by downloading them onto discs and a memory stick.

This course of conduct is akin to burglary of the corporate safe. But what can you do to stop Sid and New Street from unfairly profiting from your hard work?

The Action

·     Instruct no nonsense solicitors (without delay) who are litigation & employment dispute specialists and who understand the recruitment industry. Ensure that they have significant expertise in this area and a track record of success.

·     Consider a letter warning of an immediate High Court action against Sid, and New Street for damages for breach of copyright, breach of your database rights, database theft, breach of confidence and breach of his restrictive covenants.

·     Go for a speedy trial, if you can.

·     Your lawyers should invite Sid & New Street to undertake not to breach the restrictions, to pay you an account of all the profits made, to hand over your confidential materials and database (including any copies which have been made) and to promise never to use them again, as well as paying your legal bills.

·     Database theft is a Crime & Fraud Act offence and the respondents should be made aware of this.

·     Make sure that Sid & New Street know that they will lose at court and will consequently have to bear the brunt of your legal bills which will only increase as time goes by. If Sid owns a house, he should let his wife know they may be moving.

The Injunction

If they refuse to provide these undertakings (or do so and then breach them), you may be able to apply to the Court for a springboard injunction.  This will effectively handcuff Sid & New Street as it is a High Court order which requires the respondents  to immediately stop their unlawful conduct and orders them to handover your property. If they ignore the order, the court could at a later hearing require Sid to spend time at her Majesty’s pleasure. 

The Pitfalls

Injunctions are not guaranteed. They will be refused if you have delayed in taking action or acted improperly and you will have to demonstrate to the court that they should be granted. The risk of injustice will be an important factor, and the crucial test will be whether damages could alternatively adequately compensate you.

An application for an injunction requires a lot of work to be done in a short amount of space and although they are a sledgehammer they are not cheap.

Advantages

Once granted injunctions often have the effect of an early settlement of the main issues and do lead to early closure. They are quick and very effective.

Ashkhan Candey, head of litigation, and Matthew Tom, head of employment, at solicitors Candey of Lincoln’s Inn