16 OCTOBER 2012
The recent New South Wales Supreme Court decision between stock broking heavyweights Ord Minnett and Wilson HTM is a timely reminder that valuable information is property and if you use someone else’s property then you are exposing yourself to a claim for substantial damages.
The Court will protect all information that a reasonable person would regard as being valuable. The area where most cases concerning wrongful use of confidential information arise is in relation to the use of customer names, contacts, pricing arrangements, special benefits and the trading history of customers. Equally protected are the names and arrangements of fellow employees, associates or sub-contractors as well as any trading, marketing, financial, business or other plans or intentions of a business.
All of this information is owned by the business owner who produces or collects the information in whatever medium it exists. It may arise from meetings or telephone conversations, does not need to be in writing and it does not matter that it was passed onto you second or third hand.
In the Ord Minnett and Wilson HTM case, Ord Minnett recruited certain employees of Wilson HTM and obtained from those employees, information about advisers and others staff of Wilson HTM and then sought to exploit that information. Ord Minnett was ordered to pay compensation to Wilson HTM.
While the Court will protect valuable information in the absence of a written agreement, businesses should record in writing confidentiality obligations in as many arrangements as is prudent that they enter into, whether such arrangements be with employees, advisors, contractors, IT and other consultants or persons or companies with whom they are investigating a business opportunity. The advantages of doing so are:
a) often third parties believe that if they have not signed a written agreement then they are free to use any information that comes into their possession which, while not the case, having a written agreement is more likely to avoid the issue; and
b) the obligations can be drafted specifically to protect the business and it can avoid the need to prove to a Court the value of any particular information when applying general legal principles.
We are happy to discuss areas in which this issue might arise for you and provide appropriate solutions.
You are a valued Kinneally Miley contact, for more information related to this Legal Update please contact us.
[contactsbox] [leftcolumn]Contact Associate: Michael Coe
Direct Telephone : 07 3210 5709
Mobile Telephone : 0408 983 876
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