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Q&A: Keeping trade secrets

I’m the COO of a fertiliser plant and one of our directors has recently left. He was heavily involved in the development of a new fertiliser we have introduced to the market and therefore had knowledge of the ingredients and how it was made. I have heard different accounts of where he will work next, but we’re quite sure he is staying in this industry. We have provisions in our contracts about trade secrets, but we’re still quite concerned about how he might use the information. Should we or can we take pre-emptive action now to stop him using or sharing it?

The possibility of key individuals who possess confidential information leaving a business is often a real issue, particularly for those businesses that operate in a competitive market. There exists in common law a duty on all employees to maintain confidentiality in relation to trade secrets and confidential information which is applicable both during and after a person’s employment ends. There is, however, a practical difficulty in policing or enforcing that duty of confidentiality after the employment has ended.

In this case, it appears that you have some express provision to protect confidentiality within his contract of employment but it is not clear the extent of that provision and whether there are any other protective measures that can be utilised. At this stage, I would suggest that you ask a solicitor to review the contract of employment and advise as to what steps can be taken to protect your business.

The specific provisions addressing confidentiality issues may be enough, and there may also be specific clauses that could prevent this individual from working for a direct competitor for a specified period of time. Such contractual provisions need to be clear and reasonable to be enforceable. If they are not, then whilst you could write to him reminding him of his confidentiality obligations, you may find that it is not possible to establish whether he has disclosed or used any such confidential information for his own benefit.

In summary, if his contract is properly drafted then you have a better opportunity to protect your trade secrets.

This Q&A was written for and first featured in the Financial Times.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.

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