12 February 2015
Contacts and connections are a key asset for many businesses, particularly those in the B2B space. However, disputes often arise as to whether or not the connections are ‘owned’ by the employee or the employer. This issue often comes to the fore in cases where a senior (and often well-connected) employee moves jobs and seek to leverage their existing rolodex to compete with their former employer. Despite the importance of this issue, there is not much case law addressing this point. Consequently, a recent decision of the Jersey Courts, though not binding in Ireland, is worth some attention.
In short, the Royal Court of Jersey has found that a business’s client contact information is protected by laws of confidentiality and copyright. This decision came despite the argument that much of the information could be easily found online. The judgment is of interest as it concerns the use of client details and email addresses, such as those stored in Microsoft Outlook, and the ownership of LinkedIn contacts.
The case – Nautech Services Limited v. CSS Limited & Ors.  JRC 159 – concerned the client contact information of Nautech Services Limited (“Nautech”). Three of Nautech’s ex-employees had taken a significant amount of information from Nautech’s databases and provided it to CSS Limited (“CSS”), a competitor company that two of the ex-employees had established. Nautech obtained a court order in April 2013 preventing the use of this information. Despite this order, Nautech believed the information had been used and brought an action against CSS and the three ex-employees.
The Court found that CSS had in fact taken steps to comply with the injunction. However, one of the ex-employees continued to send emails using data taken from Nautech’s database, which amounted to a clear breach of the court order. The ex-employee had copied his Nautech work contacts to his personal email account and then onto his new work phone. He then proceeded to email Nautech contacts directly for the benefit of CSS. The Court found that CSS was also liable for this employee’s actions.
Contact information can be protected
Given the niche area in which Nautech and CSS operated, the Court found that Nautech’s contact database was an integral part of its business operation and success. There was no publically available database which could have been tapped to give a similar level of work leads for CSS. In such circumstances, Nautech’s database of customer contacts was considered to be confidential information that belongs to Nautech.
CSS argued that such contact information for potential clients could have been found quite easily via social media and the internet and that no proprietary interest should be inferred on Nautech’s behalf. The Court rejected this argument due to the lack of a centralised public resource. The Court also held that the database of client contact details was protected by Jersey’s copyright laws.
Interestingly, the Court refused to extend this copyright and confidentiality protection to the employee’s LinkedIn account. This was despite the fact that Nautech paid for the employee to have a premium account and the employee used his work email address to access his LinkedIn account. The Court based this limb of its decision on the LinkedIn User Agreement, which stated that all content and information in relation to the account belongs to the user.
What can be learned?
This decision from the Jersey courts is interesting for both Irish employers and employees. It further reinforces the prevailing school of thought in the British Isles that client contacts and leads generated by an employee in the course of their employment and stored on company systems are the property of the employer. In contrast, the decision provides judicial recognition of the argument that LinkedIn contacts belong to the employee.
This article is courtesy of EACCNY member Mason Hayes + Curran. See original here.