PennWell Publishing (UK) Limited v Isles and others (High Court)
In this case a journalist, Mr Isles, created and kept all his contacts on his employer’s computer system. This included personal contacts and business contacts which the employee had prior to joining the employer. In 2005 Mr Isles and another colleague decided that they would set up a business together which would compete with PennWell, a media company, providing conferences, exhibitions and research facilities. They were joined by another colleague and the new business was launched in September 2006.
PennWell then discovered that during their employment, and in breach of their employment contracts, Mr Isles’ two colleagues had removed confidential information comprising lists of potential customers, suppliers and advertisers. Mr Isles removed a contact list from his work computer which contained all his contacts, including his personal contacts and those that predated his employment. Mr Isles argued that this list did not belong to PennWell but PennWell said that the contact list had been prepared and maintained during and for the purposes of his employment on its computers and therefore it was confidential and their property.
The High Court held that the contacts list did not amount to a trade secret, nor did it consider that the use of individual contact names would be a breach of Mr Isles’ contract of employment. The key issue was whether the contacts list fell within the definition of company property as defined in the contract of employment. The High Court held that, where an address list is contained on Outlook or some similar programme which is part of the employer’s email system and backed up by the employer, the database and the list of information belongs to the employer and as such, the list may not be copied or removed in its entirety by employees for use outside or after employment.
PennWell had an email policy which restricted the use of the email system to business purposes but had failed adequately to communicate the policy to Mr Isles and that it was not incorporated into his contract. They observed that had PennWell done so Mr Isles would have known that the email system provided to him was for use only for business purposes and that the contact details that he had added to the system would have been added for the exclusive use of PennWell.
PennWell was entitled to retain the database and to a permanent injunction preventing use of it, but not of individual parts of its content which were known to Mr Isles by other means. PennWell had made a concession to Mr Isles in respect of those contacts predating his employment at PennWell and the court held that its concession was correctly made.
The High Court also held that Mr Isles was in breach of an express contractual prohibition against having outside interests during employment. Mr Isles also breached the duty of good faith and fidelity, because he was in a position of a conflict of interest and failed to take steps to prevent a former colleague from canvassing business away from PennWell to the new competing business venture.
Employers should make sure that all email policies are properly incorporated into the employee’s contract of employment, clearly identifying what they consider to be property of the employer as the result of information stored on their computers and email traffic. The same could also apply to mobile phones when they are provided by the employer.