An employee has been fined $50,000 for flagrantly downloading his employer’s confidential information onto a hard drive shortly before he left to work for a competitor.

What happened?

The employee worked for a mining industry software company.  On the day before he resigned and on the last day of his employment, he downloaded over 380,000 files onto an external hard drive which included the confidential ‘source code’ for a computer program.

After his employment had ended, the employee falsely stated that he had returned all of the employer’s property when asked by the employer.

Following the end of his employment, the employee used the files for his own purposes, but did not appear to use them for any other purpose (such as for the benefit of his new employer).

What did the Court decide?

The Court found that, despite using the files for his own purposes, his actions were a flagrant breach of the Copyright Act 1968 (Cth) and imposed a $50,000 fine.

The employee was also found to have contravened:

  • section 183 of the Corporations Act 2001 (Cth) by using the files to gain an advantage for himself;  
  • his equitable duty of confidence to his employer; and  
  • the express terms of his contract, which required him to devote his full working hours to his employer’s business, faithfully and diligently perform his duties, protect company property and return it to his employer on termination.

Lessons for employers

This decision is a reminder to employers to ensure that:

  • employment contracts contain robust terms protecting confidential information and requiring the return of property on termination; and   
  • systems and procedures are implemented to reduce the likelihood that employees can remove confidential information.