Breach of confidential information: Mere possession can found a claim

Prior to this case, received wisdom had been that to succeed with a claim for breach of confidence a claimant would have to prove not only that confidential information had been taken, but also that it had been used in competition, and that its use had caused loss and damage. That could often be very a difficult hurdle for a claimant to overcome.  It could also mean that remedies were often only available after the event.  Legal recourse could therefore be open to the criticism that it amounted to ‘closing the stable door after the horse had bolted’.

Adopting an innovative approach, the High Court found in this case that there is no need for a claimant to prove that it has suffered harm when alleging breach of confidence.  The High Court decided that, for breach of confidence to be established (and therefore to afford legal remedies to a party whose confidential information has been taken), it is not necessary to show that confidential information has actually been used/misused by the defendant. Rather, it is sufficient to show that a defendant deliberately and surreptitiously obtained and retained another’s confidential information.

The decision should enable employers to take action much more quickly and effectively against departing or disgruntled employees who have taken confidential information unlawfully.  In many cases, employers should be able to rely on Weiss Technik UK v Davies to take pre-emptive injunctive action – that is, to prevent the misuse of confidential information before any damage is actually done [2].

From the employees’ perspective, the Weiss Technik confidential information case is a salutary reminder of the importance of complying with obligations of confidentiality both during, and after, employment.

What happened in the Weiss Technik UK v Davies breach of confidential information claim?

Mr Jones, one of the defendants, left his employment with Weiss.  On his departure, he set up the business SJJ System Services (“SJJ”), in competition with Weiss. A significant amount of evidence, including submissions from various witnesses, proved that on leaving Weiss Mr Jones took a substantial amount of confidential information.  The stolen confidential information included USB sticks with passwords to Weiss software, software downloads and customer database details.

Other defendants, including a Mrs Whitfield, sent confidential information to Mr Jones while still in Weiss’ employment.  They used personal email addresses to help Mr Jones provide competitive quotes to Weiss’ customers, in a bid to encourage them to switch to SJJ.

In deciding whether there had been a contractual breach of confidence under the defendants’ employment contracts with Weiss, the judge considered all aspects of the matter.  She took into account the contractual terms and the relevant employment handbook. The judge found the defendants were under obligations to uphold confidentiality during and after their employment at Weiss, and that the defendants were well aware of those obligations.  The judge decided the individual defendants had breached their obligations by taking and using Weiss’ confidential information.

SJJ, a corporate defendant, was found to have breached an equitable obligation of confidence by its possession and retention of confidential software, passwords and databases which could be used to compete with Weiss.

The judge stated:

“It is not necessary to show that confidential information was specifically used by SJJ for the purposes of its business. It is sufficient that Mr Jones and SJJ deliberately and surreptitiously obtained and stored documents that were, or ought to have been, appreciated by the defendants to be confidential to Weiss.”

How we can help with breach of confidential information claims

Protecting employers and their confidential information is a complex area of law.  Cases can be highly sensitive and they can turn on their own facts, specific circumstances and even the personalities involved.  Walker Morris’ specialist Commercial Dispute Resolution lawyers are experienced in all aspects of contract risk management and dispute resolution.  Working seamlessly with our Employment colleagues, we can work with employers both when it comes to ensuring that their contracts are valid, enforceable and offer the best possible protection for the business and its confidential information; and if/when it comes to investigation and potential enforcement action in the event of any suspected breach of confidence.

For further information, advice or training, please contact Nick McQueen or Jack Heward.

[1] Weiss Technik UK Limited v Davies [2022] EWHC 2773 (Ch)

[2] For further information and essential legal and practical advice about protecting employers from breaches of confidentiality and restrictive covenants, see our earlier briefing.