A company’s database of contacts can be a valuable asset. When an employee leaves a company, can the employer prevent him taking his contacts with him so as to hinder unwelcome competition ? Even if there are no non-compete covenants, IP law can assist if you can show that the employer owns IP in the contact database and any use by a former employee would be an infringement of that IP.

In the recent case of Pennwell Publishing v Ornstien, the judge said:

” where an address list is contained on Outlook or some similar program which is part of the employer’s e-mail system and backed up by the employer, the database or list of information … will belong to the employer.”

In that case the employer was entitled to retain the list of contacts and got an injunction preventing use of it, but not of individual parts of its content which were known to the employee by other means.

In another case, Hays Specialist Recruitment v. Mr Ions, the information was not held on the company’s own internal systems but was held on LinkedIn, an on-line social networking site. Hays alleged that Mr Ions had uploaded business contacts from the company’s confidential database to his account at LinkedIn and sought an order for disclosure of documents in connection with an action for breach of confidentiality. The employee argued he had been encouraged to join LinkedIn and that once a business contact had accepted the invitation to join his network, the information ceased to be confidential as it could be seen by all his contacts. The court decided that, even if confidentiality in the information had been lost, Hays may still have a claim against Mr Ions and ordered disclosure but only in relation to contacts he had made while an employee at Hays.

The case highlights the tension between encouraging employees to use social networking websites for business reasons on the one hand and wanting to protect confidential information on the other.

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