The High Court has issued an injunction against the former global general counsel of Nissan, ordering him to return the confidential documents that he kept after his employment had ended. It did not matter whether the documents were kept for the purposes of taking legal advice.
In this case, the High Court made clear that wanting documents for legal advice was no justification for retaining confidential information in breach of contract.
Ravinder Passi was employed by Nissan as global general counsel. Following the termination of his employment, he brought proceedings in the Employment Tribunal (ET), claiming unfair dismissal, among other claims, which were denied. As part of the ET proceedings, he disclosed that he had retained over 100 documents that constituted or contained Nissan's confidential information and/or privileged legal advice. Nissan applied to the High Court for interim injunctions requiring Passi to:
- deliver the documents;
- destroy all copies in his possession; and
- provide a witness statement explaining what use he had made of the information.
Protecting confidential information in the employment context
Employers enjoy only limited implied protection after termination for "mere" confidential information. Implied duties will only protect "trade secrets" from misuse, which are typically limited to:
- confidential algorithms;
- formulae; and
- (possibly) highly secret business strategies.
This leaves departing employees potentially free to use certain other types of business information (eg, pricing, details of customers, marketing plans, products in development, salaries of other employees) for the benefit of themselves or a new employer. Courts have referred to this type of information as "mere" confidential information.
In the absence of other legal protection, it is important for companies to agree explicit confidentiality provisions with individuals who are given access to "mere" confidential information to enable its protection both during the relationship and, more importantly, after it ends.
In accordance with such an express confidentiality provision, Passi was contractually required to return Nissan's confidential information on termination of his employment. He was also expressly prohibited from using that confidential information, except for Nissan's purposes. Following his departure, Nissan reminded Passi of his obligation to deliver up all company property, including Nissan's confidential information. In response, Passi claimed to have complied with his duties, although he sought time to confirm the position. He subsequently revealed, as part of the ET proceedings, that he had retained a significant number of documents that belonged to Nissan, which contained the company's confidential information and/or privileged legal advice.
Passi admitted retaining the documents but sought to justify this on the basis that he wanted them for the purposes of taking legal advice. Separately, he also admitted to passing on some of the information to at least one journalist.
However, the High Court's ruling makes clear that an employee is not entitled to remove and retain their (ex-)employer's confidential documents in breach of contract – even if they claim to be a whistleblower taking the information solely for the purposes of obtaining legal advice.
Judge Keyser decided that Nissan's case on the question of whether Passi was entitled to remove or retain the company's documents was "extremely strong". He said he did "not begin to understand" Passi's argument that he was justified in removing or retaining the documents for the purposes of his own legal advice and that Passi had "barely a case, if any, for asserting an entitlement [to] possession of the documents or any copies of them".
The High Court ordered Passi to deliver up the documents to Nissan and refused to allow him (as he had requested) to keep copies of the documents already disclosed in the ET proceedings. Passi was not entitled to pre-empt which of Nissan's documents the company should disclose or claim privilege over.
In order to ensure the widest possible protection of the company's confidential information, employers must ensure that they have implemented well-drafted express confidentiality provisions that clearly set out employees' obligations, both during and after employment. Such clauses should include:
- clear definitions of what is considered to amount to "confidential information" in the context of the business and the employee in question;
- on termination of employment, a requirement for employees to return company property, including hard and soft copy documents, memory sticks or other cloud-based storage and devices;
- also on termination of employment, an obligation to delete permanently (at the employer's direction) any company documents stored on personal devices or email.
Similar provisions can be included in non-disclosure agreements with consultants and other individuals given access to confidential information.
Employers should be proactive in reminding all departing employees of these obligations in writing when they exit the business. It is also important to ensure that employees lose their rights to access confidential information on their exit from the business.
In the event of a breach, appropriate remedies can be sought from the High Court, including the return or destruction of any confidential documents and, as seen in this case, a requirement on the individual to disclose all use that has been made of the materials in question. This can also ensure that no further misuse is made by prospective new employers or other third parties.
For further information please contact Toni Lorenzo or Rachel Rooksby at Lewis Silkin by telephone (+44 207 074 8000) or email ([email protected] or [email protected]). The Lewis Silkin website can be accessed at www.lewissilkin.com.