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The Finance Roome Ltd


Posted 23/01/2015

“IF IT CAN HAPPEN TO NIKE – WHY NOT YOU?”

One issue that regularly comes up when I am discussing with clients post-termination restrictions and the risks posed by departing employees, is the view that it won’t happen to them and that employees in this day and age wouldn’t dream of leaving and taking with them valuable trade secrets and confidential information to use in their new business venture and to the detriment of their former employer. This is often a view that is influenced by the thought that with modern electronic communications, any unlawful use of such information would be so easily picked up that an employee would be unwilling to take the risk of being caught.

However, this is a very dangerous view to take and will leave the confidential information and commercial connections of an organisation vulnerable to unlawful disclosure and misuse. Whilst it may be the case that the vast majority of employees would not look to take confidential information with them when they leave, there is always the risk that a small number of employees don’t share that view.

Take the recent case involving Nike. Whilst it is a US case, the principles apply equally to businesses and organisations in the UK. In this case, 3 senior designers left employment with Nike to join Adidas. Between them they are alleged to have taken with them when they left Nike, high value trade secrets and confidential information belonging to Nike, including:

- High level strategic development plans for the next 3 to 4 years;
- Unreleased product designs for the next 2 to 3 years including models, sketches and designs for football boots and team uniforms;
- Financial data including an historical breakdown of all Nike footwear sales in recent years; and
- Documents relating to Nike’s marketing strategies including plans for specific high-profile sport stars.

Not only was the level of information that was apparently taking shocking, but also the alleged attempts by the departing employees to cover their tracks. This included deleting e-mails and text messages, resetting phones to factory settings and even damaging laptops to the point where one employee believed any data on it would be entirely unrecoverable.
As you would expect Nike, on discovering what the departing employees had done, took immediate steps to stop the misuse of their trade secrets and confidential information. This has included claims against the departing employees for breach of contract, theft, fraud and conspiracy.

Whilst the activities of the departing employees in this case are perhaps on the extreme side, they do demonstrate the steps that some employees are willing to take regardless of the electronic trail that may be left. It also shows the damage that can be done to a business by departing and unscrupulous employees.

It is important that employers look to address such threats at an early stage. This includes having a comprehensive contract of employment which clearly sets out the restrictions on the use of confidential information such that if misuse occurs, the business is well placed to take immediate action to protect its position.

If you would like to discuss how your organisation’s confidential information and commercial connections can be protected please contact Matt Jenkin on 01242 246458 or mejnkin@hcrlaw.com.

 By Matt Jenkin, Harrison Clark Rickerbys

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