A recent decision of
the Federal Court in APT Technology Pty
Ltd v Aladesaye [2014] FCA 966 demonstrates that employees who attempt to use the
confidential information of their former employers in their new business
ventures can be restrained from doing so even if there was no formal restraint
clause in the their contracts of employment with their former employers.
When APT discovered
that Mr Aladesaye had established a business in competition with its own
(whilst still its employee) and was taking or using client lists and know how
he was summarily dismissed.
APT then asked Mr Aladesaye
to provide undertakings not to use confidential information he had obtained in
his employment with APT but the parties could not agree on the terms of the
undertakings.
The result was that
APT applied to the Federal Court to restrain Mr Aladesaye from continuing to
use its confidential information.
As there was no
formal restraint clause in Mr Aladesaye’s contract of employment, APT relied
upon the “springboard principle” developed from a line of English cases and applied
in Australia.
The springboard
principle is that information a person has obtained in confidence is not to be
used as a springboard for activities detrimental to the person who made the confidential
information. The possessor of the confidential information must be placed under
a special disability in the field of competition to ensure that he does not get
an unfair start.
In the circumstances
of the APT case Justice Foster made orders restraining Mr Aladesaye from
approaching APT’s clients or using or disclosing APT’s confidential information
or intellectual property to any other person for specified periods.
So if a former
employee is using confidential information to a former employer’s disadvantage,
the fact that the former employee had no restraint clause in his contract of
employment may not be the end of the matter.
Obviously, employers
best safeguard their positions if express and well worded restraint clauses are
part of their contracts of employment.
