Misuse of Confidential Imformation

Misuse of Confidential Imformation

A recent case heard in the Federal Circuit Court of Australia in late 2016 has clarified how the Corporations Act 2001 (Cth) and the Copyright Act 1968 (Cth) work collectively to provide remedies against ex-employees who ‘steal’ and use confidential information acquired during the course of their employment.

The applicant (SAI Global Property Division Pty Ltd) brought forth proceedings against a former employee who electronically copied files from his work computer onto a personal USB device, prior to resigning.

Misuse of company information breached the employee’s contractual obligations and fiduciary duties to uphold confidentiality. The files contained sensitive information pertaining to clients of SAI which the employee proceeded to use following his resignation while employed at a competitor company a mere two weeks later.

Problematic to the defendant’s case was that he used the information to compare client databases while working for his new employer during the course of his two-week resignation period with SAI Global.

This misuse of SAI’s information gives rise to a contravention of section 183 Corporations Act 2001 (Cth) which prevents a former employee from utilizing certain types of company information after termination of their employment.

In using his position as an employee to improperly gain an advantage for the competitor company, the Defendant was in further breach of the Corporations Act 2001.

However, as this particular case demonstrates, it is difficult to be awarded damages under the Corporations Act where there is a breach of fiduciary duty that does not give rise to any ascertainable injury. The Court therefore looked to the Copyright Act in order to award damages in the sum of $5000.00 to SAI.

In the modern digitalised age, employees are able to easily copy confidential or copyrighted material with no noticeable physical trace. The Court has therefore shown a willingness to award additional damages under the Copyright Act in cases where the Defendant’s behaviour is dishonest and can easily be replicated.

Although it is easier for confidential or copyrighted material to be obtained, the penalties for these infringements have become harsher. Therefore if you have been given access to confidential information in a company (whether you are a current or former employee), it is vital that you are responsible with this information and do not allow it to be distributed to others who are unauthorised.

If you have found yourself in a similar position or require assistance with a copyright or employment matter, please contact our Litigation Team by email to litigation@hatzis.com.au or call (07) 3345 4388.

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