Aug 26, 2016

Court Orders Destruction of Confidential Information Before Trial

The High Court recently granted an order before trial containing a provision not believed ever to have been included in such an order before. The case is Arthur J Gallagher Services (UK) Ltd and others v Skriptchenko and others [2016] EWHC 603. The Claimants sought an interim injunction requiring the Defendants to allow inspection of their electronic devices, and the subsequent deletion of any confidential information belonging to the Claimants that was found on those devices. The High Court granted the injunction, ordering the review and subsequent destruction of the Claimant's confidential information found on computers of the Defendant.

The Claimants are a group of companies who provide insurance brokerage services. Mr Skriptchenko worked for the Claimants until summer 2014; he then commenced employment for a rival insurance brokerage (Portsoken Ltd) in or around February 2015. It was discovered in July 2015 that Mr Skriptchenko had taken confidential information from the Claimants and was using this information to contact the Claimants' clients. The Claimants brought a claim and issued the application for an interim injunction in the High Court. The injunction sought applied to Mr Skriptchenko personally and also to Portsoken Ltd.

Approximately 4,000 documents containing the Claimants confidential information were discovered, and it appeared from those documents that other employees of Portsoken had misused the confidential information. The documents also appeared to show that both Mr Skriptchenko and Portsoken Ltd were aware of the fact that they were misusing confidential information.

The Claimants then applied for a further mandatory injunction to allow them to delete any confidential information discovered. Importantly, the Claimants stated that the electronic devices should be supplied to the Defendants' IT experts and not to the Claimants themselves. It was also agreed that copies of the confidential information could be kept so that if information was found to be wrongly deleted it could be restored.

Where an interim injunction is granted, a Claimant will invariably be required to provide a cross-undertaking in damages. As a result, if, at trial, the Court finds in favour of the Defendant, the Claimant will be liable to compensate the Defendant for its damages resulting from the interim injunction order.

This Court's decision in the present case may appear slightly draconian, particularly considering it was made prior to any finding of liability, but the Court considered the fact that the Defendants had admitted knowingly misusing the confidential information. The Court was also of the view that the Defendants could not be trusted to delete the confidential information themselves.

It is standard practice for employment contracts to include terms for the return of any confidential information that may be held by an employee on termination of employment. This decision gives employers appears to provide a new option for employers in confidential information disputes in the future.

If you have any questions on the above, please do not hesitate to contact the team at McDaniel & Co. on 0191 281 4000 or legal@mcdanielslaw.com.

Posted by: in: Civil Procedure, Contract, News

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