Preventing total wipeout – an update on protecting information in team move cases

Written on 14 Oct 2014

The BBC recently reported on a number of instances of devices seized in criminal investigations being wiped remotely whilst in police custody (see here). Whilst this currently does not seem to be a widely known phenomenon it may be of particular interest to employers in sectors that are susceptible to potentially damaging team moves such as finance, insurance and tech, media and comms. In team move cases, where two or more employees leave their employer to set up in competition or join a competitor of their employer in breach of their restrictive covenants, evidence is key. It is not uncommon for employees in such cases to communicate with each other frequently over email, text message and telephone calls – all of which can provide invaluable evidence in demonstrating a concerted team move.

In the well-known case of Tullett Prebon Plc and others v BGC Brokers LP and others, the courts were particularly swayed by the fact that a number of the defendants who transferred to BGC had “lost” blackberrys and other phones which might contain “inconvenient information”. However, now employers should be aware that even if they do get their hands on the offending item there is a risk that a sophisticated errant employee may look to wipe it of relevant data before any incriminating evidence can be discovered – and it will be very hard evidentially to prove that the employee has wiped such incriminating evidence.

Where technology is potentially critical, employers should now be thinking ahead not only how they obtain the evidence but also how they protect it. Below are our key considerations for businesses in order to better protect themselves in team move situations:

  • Is your house in order? – without enforceable restrictions it doesn’t matter how flagrant a breach is, a court will not act to prevent a team move. Such restrictions are an illegal restraint of trade unless you can prove that they go no further than is necessary to protect your legitimate business interest. Therefore restrictions on team moves (which are of questionable legal validity anyway) should be tightly drafted and regularly reviewed.
  • Act fast… If a company is looking for an injunction to prevent a team move any delay will impact adversely on the argument that there is an immediate risk to the company’s business, dramatically reducing its chances of obtaining an injunction to stop it. Forensic investigation should be carried out as soon as possible to establish whether the company has sufficient evidence of wrongdoing. This may now include using appropriate tools to protect evidence such as using a radio-frequency shielded bag or even a microwave to hold the devices, though a microwave may be a little less portable!). Identifying in advance experts you can call upon to assist in securing and protecting data in such situations will be critical.
  • …but tread carefully. Any actions taken should be carefully considered. You should try to ensure that your investigations don’t alert the employees to the fact you are aware of their wrongdoing until you are in a position to take the necessary steps to protect your business. Care must also be taken to avoid breaching your data protection and privacy obligations to any employees in carrying out any monitoring or searches, including your obligations under the Data Protection Act 1998 and the Regulation of Investigatory Powers Act 2000. It is worth ensuring now that your employment contracts and policies give you the contractual rights to monitor communications sent and received on employee’s work devices (or personal devices used for work) and seize them in appropriate circumstances. If you don’t have a policy which covers the monitoring of electronic communications then you should consider putting one in place and bringing this to your employees’ attention.

If potential team moves are a concern to your business we shall be very happy to discuss these issues further with you.  Please contact your usual OC Contact for further details.