An employer has been successful in restraining a former employee and her new employer from using the old employer’s contact list in the recent decision of Prime Creative Media Pty Ltd v Vranjkovic [2009] FCA 1030.

The restraint granted by Justice Ryan of the Federal Court of Australia is on an interim basis, until the matter is finally determined. The decision indicates that the courts are willing to assist with the protection of a business’ confidential information from unauthorised use by former employees.

Magazine editor

The employer is a publisher and provides marketing services to the commercial road transport industry. The employer has built up and maintains a database containing names, addresses, telephone numbers and email addresses of contacts, including advertising customers, subscription customers and marketing services customers. The database contains more than 1000 names and contact details.

The employee was initially employed by the employer as a magazine editor, and later as a marketing and accounts manager. The employee had access to the database during her employment and compiled her own database of contacts during the course of her employment.

The employee resigned in September 2008. Shortly after her resignation, the employer’s Managing Director received contact from several of his clients on the database advising that the employee had contacted those clients via email to say that she was doing some consulting and public relations work on her own.

The Managing Director became concerned that the employee had retained a copy of the database and was using it for her own purposes. He wrote to the employee and asked her to return any CDs or hard copies of email, email backup, editorial contacts and general databases. The employee did not respond.

The employee worked in a number of positions before commencing work with a new employer. That new employer also published a magazine targeted at the commercial road transport industry.

Confidential nature inferred

The old employer alleged breaches of the obligation of good faith and fidelity, the obligation of confidence, the Corporations Act 2001 (Cth) and the Copyright Act 1968 (Cth).

The Court accepted that the information contained in the database, even information gathered by the employee, was confidential. It did not matter that:

  • the old employer had not expressly required that the information in the database compiled by the employee be treated confidentially, or
  • “…means of contact, including postal and email addresses and telephone numbers of actual or prospective advertisers in the employer’s publications could be ascertained, without a great deal of additional work, from other sources such as the [employer’s] publications themselves [or] the ‘Yellow Pages’”.

Decision

Accordingly, Justice Ryan granted the old employer’s application for an injunction restraining the employee and new employer (including the employee and the new employer’s employees and agents) from using for any purpose the lists of names, addresses, email addresses and telephone numbers appearing on the database or databases compiled by the employee during the course of her employment with the old employer, those databases having been referred to by the employee in her affidavit in the proceedings.

Justice Ryan also ordered that the computers of the employee and new employer be examined by an independent expert to determine whether there was any information on those computers from the old employer’s database. The restraint upon the employee and new employer’s use of the database information only applies until the matter is finally determined.

Tips for employers

It is unclear from the decision whether the employee’s employment contract specified the employee’s obligations in relation to confidential information and intellectual property owned by the old employer. In any event, the employment relationship, even without specific contractual obligations, involves a duty of confidence to the employer by the employee.

It is still advisable, however, for employers to ensure that an employee’s use of the employer’s confidential information and intellectual property is specifically dealt with in the employment contract. This can assist in deterring an employee’s unauthorised use of the employer’s information and provide the employer with greater avenues to pursue the employee for breach of contract should the employee fail to comply with their obligations specified in the employment contract.