UK: Contacts List Stored In Outlook Belongs To The Employer

Last Updated: 18 July 2007
Article by James Libson and Joanna Blackburn

Mishcon Success At The Lawyer Awards

First of all, we are delighted to report that the Employment Group won the Employment Team of the Year award at this year's The Lawyer Awards. The Group was recognised for acting on an outstanding range of cases and for "continuing to shape the law". Our growth over the last year was also highlighted and one judge commented that Mishcon's Employment Group is "a growing team with a remarkable case load". We would like to take this opportunity to thank all of our clients who have worked with us over the years for helping us get to this point, and we look forward to working with you in the years to come.

Contacts list stored in Outlook belongs to the employer

Moving on to this month's employment topic, we look at the recent case of PennWell Publishing (UK) Limited v Isles, which dealt with the ownership of contact lists stored by an employee on his employer's computer system. We will also give a brief overview of employee theft or misuse of confidential information and other data belonging to employers.

In the PennWell case, an employee, Junior Isles, brought a number of contacts with him when he started employment with PennWell and subsequently added contacts, both business and personal, to a contacts list that he stored on his employer's computer system. When he left to start up a competing business, he took the entire list with him. The dispute concerned whether or not the contacts list belonged to PennWell.

The High Court held that, where a contacts list is stored in Outlook (as was the case here) or some other part of the employer's computer system, the information belongs to the employer (even if it includes private and pre-employment information). This means that the employee may not copy or use it outside their employment, whether during or after its termination. The Court highlighted the need for e-mail policies in this area to ensure that employees are aware that the systems provided by employers are to be used for business purposes only and that anything created using those systems will be treated as exclusively for the employer's benefit. The High Court did, however, recognise that, in the absence of a clear policy to the contrary, an employee would be entitled to remove private contacts prior to leaving employment (provided that these can be identified).

Data theft - issues to consider

Though the PennWell case may come as a relief for employers, it highlights the not unusual situation where a departing employee takes or copies their employer's confidential information or database. Sometimes this may be inadvertent (for example an employee leaving with a handful of client contacts on their mobile phone) but often it is because the information will be useful in a competing business. The misuse of such information can cause the employer significant damage. So how can an employer protect itself against the theft of its information by employees?

First, employers should ensure that they have employment contracts that are properly drafted (and signed and dated) with valid and enforceable confidentiality obligations, database clauses and restrictive covenants (where appropriate). Properly drafted e-mail policies will also assist. Further, there are steps that can be taken to protect data against the risk of it being stolen, such as configuring computer systems to prevent mass downloads or copying of data and operating password protection. Provided there is an e-mail policy in place permitting such measures, the employer could also routinely monitor the use of e-mail, photocopiers and similar devices. This may enable an employer to discover whether an employee is misusing or planning to misuse confidential information (for example if the employee is sending documents to a personal e-mail account or doing an unusual amount of photocopying). It is often cheaper and more effective to implement such preventative measures rather than seeking to recover data once it has been unlawfully taken.

The above measures will not only help prevent employees from taking and misusing their employer's information but will also assist the employer in any necessary legal action. For example, one of the factors that a court takes into account when deciding whether information is truly confidential is whether, and to what extent, the employer took steps to impress upon employees that the information was considered confidential. When legal action does become necessary, a wronged employer may obtain High Court Orders for (among other things) the immediate delivery up of the information and permanent restraining injunctions preventing the use of the information for an indefinite period. The court may also order full disclosure of what use has been made of the information and who has copies of it to assist the employer in recovering its information from any third parties who may have obtained it. The employer may also be entitled to recover compensation from the employee for any financial loss arising from the misuse of the data.

While prevention is clearly better than cure, there are a number of remedies available to an employer who has suffered data theft. Swift action is essential, however, to ensure that these remedies are effective.

This article is only intended as a general statement and no action should be taken in reliance on it without specific legal advice.

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