Employment: Consultants subject to implied duty of confidentiality

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Although employers are well-advised to put express provisions in a written contract, it is established that employees are subject to an implied duty of confidentiality that prohibits them from using or disclosing their employers “trade secrets” even after the employment has ended.

A recent High Court case, Vestergaard Frandsen A/S and others v Bestnet Europe and others, establishes that self-employed consultants are also subject to implied duty of confidentiality in certain circumstances.  In this case the consultant was involved in developing the formula for an insecticide-impregnated mosquito net.  Although he assigned all intellectual property rights in the product to the company he was contracted to, a database containing technical information was used to set up a rival business that also produced a mosquito net.  The court decided that although there was no express confidentiality provision in the consultancy contract there was an implied duty of confidentiality since the consultant was engaged specifically on the development of the product and had access to technical data relating to the formula.

Comment

While this is a useful extension of the concept of the implied duty of confidentiality, we strongly recommend that all employment contracts and consultancy agreements contain appropriate express undertakings to maintain confidentiality and, where appropriate, clauses dealing with intellectual property rights and restrictions on competition post-termination.

Resources

Vestergaard Frandsen A/S and others v Bestnet Europe and others [2009] EWHC 657 (Ch)

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Disclaimer

Content is for general information purposes only.  The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice.  If you require assistance in relation to any issue, please seek specific advice relevant to your particular circumstances.