The Court of Appeal has considered, in the case of Vestergaard Frandsen v Bestnet Europe Ltd [2011] EWCA Civ 424, the extent of an employee's duty of confidentiality. Such a duty may arise, in appropriate circumstances, even if there is no express term in the employee's contract.

In this case, the employee's contract did state that, during her employment, she was not to use or disclose information confidential to the employer and, after termination, she was still under an obligation not to disclose highly confidential trade secrets.

In fact, while still employed and with other employees, she was closely involved in setting up a rival business and on the commercial side of developing a rival product. The High Court judge decided that, in so doing, she was in breach of her duty of confidentiality even though she did have access to the employer's highly confidential product database and did not know that it was being used to develop the rival product.

The Court of Appeal held that this approach was wrong. Although she may have breached other obligations to her employer, she could not breach the duty of confidentiality unless she knew the information and knew that it was secret. The court went on to say that, if the contract was intended to forbid unknowing use of the information, it should have said so. If there is nothing written into the contract at all, then an employee will certainly not be liable for unknowing use or disclosure of confidential information.

Points to note –

  • This case confirms that, if an employer wishes to protect its trade secrets, it should include express terms in the employment contract of relevant employees making it quite clear what the information is that needs protection.