Data Theft

[bsc10]

Hi all,

Looking for some advice on the following situation. Two ex employee's of ours have left the company taking with them copies of customer data and company documents. They are offering our existing services at a reduced cost to the customer, but they are working through the customer list stolen from our company.

Our employee contract's do have restrictive covenants in place whereby an ex-exployee cannot work within the same sector of business within 6 months of them leaving our company. The contract's also include provisions for data ownership and data rights, all data provided and obtained by staff on company time is the sole property of the company etc.

Does anybody have any experience of dealing with such a situation, i have my first meeting with my solicitor on Wednesday.

 

[maxine]

I would also contact the police to see what route they suggest. After all theft is a criminal offence.

 

[i.m.]

We did something similar for a client a while ago - essentially you will be seeking undertakings in lieu of an injunction and an order for delivery up of the customer data lists. It is a painful process because if the undertakings are not given, then you will need to apply for ther appropriate injunction and you will need to give full and frank disclosure to the Court about the whole process - essentially being forced to wash your dirty linen in public. It is a time consuming and expensive process. You want to try and negotiate if you can and get some decent undertakings. Do not allow the lawyers to get too excited, because otherwise the bill will mount. Lawyers tend to like injunctions, because they lead to a process that has to be followed through and tends to incur costs.

Best

BR

 

[bsc10]

Thanks maxine, i will contact the police today.

Also, in response to BR's post. At the moment we have recieved only phone calls from the two ex-employee's about how they intend to report the company and make life uncomfortable for us if we pursue them through the courts.

If we were to get the customer lists back from them im sure they will have made copies for themselves anyway, our main concern is the fact that they are re-signing our existing customers. Im speaking with a legal department today on how we can stop them from targeting our existing customers.
I'll keep you all posted on the outcome of that meeting. Thanks for the post BR.

 

y3sloans.com protects its data with High Court ruling


y3sloans.com, a Cardiff based secured lending broker, secured a High Court judgment on Tuesday against a former business systems analyst who took copies of databases before leaving the company in a bid to set up a rival company.

At an interim hearing in November 2007, the High Court ordered the former employee to return all confidential information he removed from y3sloans and provide a sworn affidavit confirming the information he had taken and to whom it had been passed.

He was also ordered to abide by the post-termination restrictions in his employment contract.
The judgment also prevents the former employee from using or disclosing any of the confidential information he had acquired during the course of his employment.
The order prevents him from working with or for any competing or similar business within South Wales until 3 September 2008. He was also ordered to pay y3sloans’ legal costs of the entire claim. Christopher Nott, senior partner at Capital Law speaking on behalf of his client y3sloans.com, said: “This judgment sends a clear message to employees who seek to gain from taking confidential information, either for sale or, as in this case, to set up a rival firm.”

Hope this helps

 

You need to make it clear to these muppets that any clients they are stealing from yourselves by use of information they have stolen would be considered in a claim for damages by their breach of contract.
As advised, telephone the police as there has been a data theft, and start doing some pro-active communications with your customer base. If you leave this then you may not have one left at the end of the day.

You are in the right here, ensure the muppets are fully aware that any costs incurred in your necessary actions will also be claimed.
It may be worth ascertaining what they are trading as, when the Company was set up as this may allow for a claim for breach of trust & mutual fidelity amongst the other things.

 

[i.m.]

There is another avenue open to you which you should talk to your legal advisers about and that is what is called Norwich Pharmacal relief - it is relief directed to third parties who through no fault of their own have become mixed up in the situation. It widens the net.

 

[bsc10]

Hi Paul (Capital Law) Thanks for the post, im pleased that the case was decided in favor of the company. Just a question, what was the total court cost of the case? Also, how long did court proceedings last from start to finish? We are a small company and we can only budget a certain amount of funds towards the cost of a legal team.

Also thanks to FPB-advice, i had not considered the claim for damages and that may be an effective tool to let them know how serious we are about this situation. My admin team are already contacting our customers to ensure they are aware of these two cowboys and hopefully the customers will notify us if approached by them. We will definately try and find out in detail about their company information or if it even exists! I doubt it very much if these two even have the proper documentation or if they are even certified to operate within our industry.

Thanks for all the support so far to all of you that have posted replies.

Regards

Bill

 

[yorkshirejames]

Bill, unless you have a six figure sum available to spend, and limitless time to devote to this, then just let them get on with it. Unless your restrictive clause is 100% perfect then you may even find that it is held not to be enforcable.

Look up the case of RDF Media v Clements - judgment at http://www.bailii.org/ew/cases/EWHC/QB/2007/2892.html but reading commentaries online will probably be of more use to you.

 

[bsc10]

Thanks for the advice yorkshirejames, looks like us small companies are stuffed when it comes to protecting ourselves and our interests. Seems as though an employment contract is not worth the paper its written on.

As you suggested we are conducting our day to day business operations as normal and generating leads and new opportunities. We accept that competition has always been fierce within our industry, but when our existing customers are specifically targeted by two individuals who have inside information on the services we have provided it does not become fair competition anymore. We lose ongoing revenue from the customer and also lose on redundant and returned equipment, a bitter pill to swallow to say the least.

Still waiting and hoping on a positive reponse from our solicitor, i'll keep you all posted.

 

[bsc10]

Another two customers cancel services with us today and the company is losing revenue each time. Solicitors response is not very encouraging, they insist it will take time for the legal process to become enforceable.

The two people in question have made it clear they do not fear legal action as they have nothing to lose.

The police are not interested in data theft they advised us to seek legal advice as they insist its a civil matter. Im absolutely astonished at the lack of help and protection available to a company in this type of situation, all the support and advice seems to be heavily in favor of employees.

 

[Julies bookkeeping]

If you belong to FSB give their legal line a call.

 

[yorkshirejames]

Try the police again. It can be a criminal matter, but then again, perhaps you could deal with it more effectively in the County Court.

As I said, do be conscious of your rising legal fees.

 

[bsc10]

If you belong to FSB give their legal line a call.

Im not a member of FSB, is it too late to join now with regards to the current situation?
Going forward will the FSB be able to offer guidance on general HR and contractual issues i.e notice periods, holiday entitlenment etc?

Regards
Bill

 

[bsc10]

Try the police again. It can be a criminal matter, but then again, perhaps you could deal with it more effectively in the County Court.

As I said, do be conscious of your rising legal fees.

I think i have all but given up with the police, im not even able to have an officer come and have a meeting with us.

The two people in question have since returned the data back to us but they have altered all of it and mixed it up so it is un-useable. They continue to target our customer base, we intend to pursue them fully through the courts.

Regards
Bill

 

Any organisation you join Bill would not really be of much help in your situation as they could not act retrospectively, there could be advice/pointers from legal helplines but that is about it. Your best bet with your current situation is to be as I have said before to be proactive in talking with your clients, perhaps pre-warn that a couple of dubious ex-employees who copied information from your database are calling to offer alternate service but have neither the means nor knowhow to give the support needed with the service etc.

Should you need in the future support for HR/H&S etc then you can gain this with membership of the FPB 08451 301722 unlimited advice from the helpdesk in respect to any employment/business matter and a legal helpline, access to tax/vat/H&S specialists, documentation available to assisst with your HR needs, membership comes with an 11 point legal expense insurance which can be extended to include restrictive covenants and their enforcement, a little after the horse has bolted in this instance, but so is life

 

[shaneh]

Data Protection covers this issue and if they are using details supplied to your company the information held by you is in fact property of the company. See your solicitor and if they say they cant do anything , thats cdrap, go to another one that deals in emplyment law and company legal rights.

 

[bsc10]

Just an update,

Our solicitors are pursuing this matter on our behalf, but it will take time and the costs will increase the further we go on. We will of course be looking to recover our legal costs if we are successful with our claim.

In the past week our team has been busy sending email's and letters to all the customers who we know will be aproached to warn them of the situation. As a company we have decided to concentrate on our core activities and to re-establish our focus to get back on track with our targets and deadlines. We know this situation will take time to be resolved so we will push on and not let it affect us any further.

Thank you to all of you that have taken the time to post advice and comments and offer your support. I intend to register to become a full member of UKBF myself.

I'll post the next update when i have further information to add.

Regards

Bill

 

[Glennzoom]

Hi Bill,

What was the outcome of this ?

 

[confused72]

Hi all,

Looking for some advice on the following situation. Two ex employee's of ours have left the company taking with them copies of customer data and company documents. They are offering our existing services at a reduced cost to the customer, but they are working through the customer list stolen from our company.

Our employee contract's do have restrictive covenants in place whereby an ex-exployee cannot work within the same sector of business within 6 months of them leaving our company. The contract's also include provisions for data ownership and data rights, all data provided and obtained by staff on company time is the sole property of the company etc.

Does anybody have any experience of dealing with such a situation, i have my first meeting with my solicitor on Wednesday.

You may find Section 55 Data Protection Act kicks in.

 

[The Resolver]

My admin team are already contacting our customers to ensure they are aware of these two cowboys and hopefully the customers will notify us if approached by them. We will definately try and find out in detail about their company information or if it even exists! I doubt it very much if these two even have the proper documentation or if they are even certified to operate within our industry.

I would immediately stop them contacting customers until you have taken legal advice on what should be said to customers to ensure you are not gifting them a counter-claim for defamation. You should avoid suggestions of theft, or that they are 'cowboys' or not certified in law to conduct the service etc. Keep it simple, ie that there is a restraint clause and that you will be seeking an order of court to stop them. You should steer clear of suggesting they will give a poorer quality of service etc

You may find Section 55 Data Protection Act kicks in.

Only applies to personal data so the names and addresses of companies, and the nature of their business would not be covered. One could argue that the contact name of a person within a company is 'personal data' as it identifies a 'living individual' and states where he works and what is his job, but you are not going to get the Information Commissioner terribly excited about taking action.

 

[MikeJ]

OP is two years old.

 

[The Resolver]

OP is two years old.

How clever of the little fella but I thought you had to be 18 yrs at least

cheers

 

[VeryMark]

I always advise clients not simply to be put off by the possible costs - the first step should be to instil fear into the other side that you will stop at nothing and make life very difficult and expensive for them so that, however reluctantly, they come round to the idea that settling with you will be less painful tham simply sitting on their hands.

If that can be done to start with at moderate cost, then not only will a successful outcome be that much more likely but it will stand you in good stead for the future.

 

[B2BDatasolutions]

I would also contact the police to see what route they suggest. After all theft is a criminal offence.

Unfortunately, as it's not the theft of a physical entity it will most likely be considered a civil matter.