The approach to protection of trade secrets and proprietary information in the European Union varies widely between Member States. The following is a brief outline of the English law position.

English law allows wide confidentiality and similar obligations, protecting the employer’s intellectual property rights and confidentiality, during the course of employment. It is usual for the employment contract to contain a clause defining the rights that are protected and prohibiting the employee from using or disclosing them, except so far as necessary for work.

It is more difficult to prevent a former employee from abusing confidential information. Restrictions on an employee after employment has ended are against public policy and unenforceable unless:

  • reasonable in the interests of the contracting parties; and
  • reasonable in the interests of the public.

There are two stages in assessing reasonableness:

  • Legitimate interest of the employer in obtaining protection — three main categories: customer connection, trade secrets (or other confidential information), and the stability of the workforce;
  • Overall reasonableness of the restraint — i.e. not too wide in scope (geographically and subject-matter) and not excessive in duration.

The usual forms of restrictive covenant found in the UK are:

Non-solicitation

Prohibiting solicitation of customers. These should be limited to those with whom the employee dealt personally within a defined and reasonable period. The more senior the employee, the wider the permissible pool.

Prohibiting dealing with customers, regardless of whether the employee initiated the approach. The restriction can be wider than the non-solicit.

Non-Competition

Prohibiting engaging in a competing activity. Typically — but not always — these are drafted by reference to geographic area. This particular type of prohibition will be upheld if the employee has access to confidential information.

Non-solicitation of other employees

Prohibiting poaching of senior employees, usually limited to colleagues known personally to the employee.

Factors taken into account in deciding whether a restraint is reasonable include:

  • the nature of the employee’s job;
  • whether the employee is prevented from earning a living in his chosen field.

Normally, if the restraint is unreasonable, the entire restraint is unenforceable — the court will not apply a more limited version of it.

Enforcement

The usual remedy against a defaulting employee is an injunction. This can be obtained at very short notice. Damages can also be awarded

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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