The Federal Court has ordered that a former employee pay his previous employer $50,001 in damages, plus costs, for copying a large volume of material onto an external hard drive which he failed to return at the end of his employment and then accessed when employed by a competitor business.


Implications for employers

It is common place for employment contracts and termination checklists to address employees’ obligations with respect to the return of company property upon termination of employment. This decision is a reminder that these contracts/checklists should be reviewed to ensure they adequately address the return and/or destruction of electronic company materials located on employees’ personal electronic devices (including computers, hard drives, USBs or within personal email accounts). Employers should also ensure that employees are not only aware of their obligations regarding the return and destruction of company property, but the potential consequences of failing to comply with such obligations.

Background

During the period 10 May 2010 to 3 November 2011, the respondent, Mr Koudstaal, was employed as a software engineer at the applicant’s Australian entity, Leica Geosystems Pty Ltd (Leica Australia). On 7 November 2011, Mr Koudstaal commenced employment with a competitor company, Automated Positioning Systems Pty Ltd (APS).

During the period 11 October 2011 to 3 November 2011, whilst Mr Koudstaal was still employed by Leica Australia, he copied a large volume of Leica Australia’s material to an external hard drive (Taken Material) of which he took with him when he ceased employment with Leica Australia. On Mr Koudstaal’s final day of employment with Leica Australia, he signed a ‘Termination Checklist’ in which he agreed, albeit falsely, that he did not have in his possession any property of Leica Australia.

The Marketing Executive of Leica Australia, Ms Vella, subsequently became aware that Mr Koudstaal possessed the Taken Material after she attended Mr Koudstaal’s apartment when the contents of the relevant hard drive were displayed on a television screen and she saw a folder entitled ‘Leica’. Further, Mr Koudstaal had also made a number of comments to Ms Vella which indicated he possessed the Taken Material. Ms Vella subsequently tipped off Leica Australia that a former member of staff had copied a large volume of company material, and Leica Australia deduced it was Mr Koudstaal.

The evidence produced in the proceedings indicated that on 24 January 2012, Mr Koudstaal copied all of the Taken Material from his external hard drive to his lap top computer, and that during the period 24 January to 27 January 2012, Mr Koudstaal accessed part of that Taken Material. Mr Koudstaal asserted that no use was ever made of the Taken Materials except when he accessed the Taken Material to check his work after he was allegedly advised at lunch with former colleagues from Leica Australia that his attempt to fix a piece of software relating to a mine site in Indonesia had not worked. However, Mr Koudstaal’s version of events was disputed by Leica Australia and by the evidence of four of the witnesses who attended the lunch. Leica Australia pointed to the fact that at the relevant time in which the Taken Material was copied/accessed, Mr Koudstaal was working on a new APS product which did not have full functionality, whereas Leica Australia’s comparable product did.

Leica Australia initially sought relief from both Mr Koudstaal and APS, albeit the claim against APS was later withdrawn. Leica Australia pursued the following causes of action against Mr Koudstaal:

  • copyright infringement under the Copyright Act 1968 (Cth);
  • breach of Mr Koudstaal’s equitable obligation of confidence;
  • breach of various terms of Mr Koudstaal’s employment contract with Leica Australia including terms with respect to his general duties, competition and confidentiality during his employment; post-employment duties and return of company property; and
  • breach of Mr Koudstaal’s statutory duties under section 183(1) of the Corporations Act 2001 (Cth) (Corps Act) (i.e. improperly using information obtained as an employee of Leica Australia to gain an advantage for himself or someone else, or cause detriment to the applicants).

Decision

Justice Collier ordered that:

  • it be declared that Mr Koudstaal had infringed copyright, breached his equitable duty of confidentiality, breached various terms of his employment contract and breached his statutory duty under section 183 of the Corporations Act;
  • as relevant, Mr Koudstaal be permanently restrained (whether personally or through others) from keeping, storing, using, publishing, communicating, disclosing or reproducing Leica Australia’s material;
  • Mr Koudstaal deliver to Leica Australia’s solicitors all of Leica Australia’s property which was in his possession or control within 7 days of the order;
  • Mr Koudstaal pay compensatory damages of $1.00 for copyright infringement, breaches of his equitable duty of confidentiality and breaches of his employment contract;
  • Mr Koudstaal pay additional damages of $50,000 for copyright infringement; and
  • Mr Koudstaal pay Leica Australia’s costs of the proceeding.