July 3, 2023
Running a business exposes you to a lot of risks. A particular risk is misuse of your confidential business information. Of course, information isn’t something you can lock away in a safe and it’s often difficult to protect it due to how it’s communicated and shared throughout your business.
The problem is, it’s not just competitors that you have to worry about when it comes to confidential information within your business, it can be your own employees, too. Employees or former employees may use said information against you, or in their favour – which is where a springboard injunction comes in.
What is a springboard injunction?
So, what is a springboard injunction? It’s what a Court may grant to enforce a former employee’s contractual obligations not to compete with your business or misuse your confidential information to give themselves an unfair advantage over your business. For example, if they obtained confidential information about your business that they could use to start their own business unfairly – you would want your business to be protected from that.
Confidential information should be just that and it shouldn’t leave your business unless you want it to, which is exactly why businesses are given the power to protect themselves from such a thing happening. In the first instance, this will be a confidentiality clause in the contract of employment and post termination restrictions. It is important to note that only information that is so confidential that it amounts to a trade secret will be protected after an employee’s employment ends if you do not have an express confidentiality clause in the contract of employment. Likewise, once an employee’s employment ends they will be free to compete, contact your customers, poach your staff and use your suppliers unless you have well drafted post termination restrictions in place in the contract to prevent them from doing so for a reasonable period.
When do I need a springboard injunction?
If you’re concerned about any confidential information within your business being wrongfully used, it would be helpful to know how and when you can seek a springboard injunction. There are a number of scenarios where a springboard injunction can be obtained and while ultimately it will come down to what is decided in court – you should consider it as an option if:
- Your former employee has taken or misused information from your business to gain an unfair advantage. This can come in the form of business models, client lists, pricing lists, profit margins, prices negotiated with suppliers and more.
- The employment contract established with the former employee was breached in order to aid or benefit a new employer or business. This could be a contractual confidentiality provision or a post termination restriction that has been breached.
- Employees moving from your business to another to directly benefit another business, while causing issues and losses for your business.
These are just a few of the examples where seeking a springboard injunction may be appropriate. Much will depend on the extent of loss and disruption caused to your business and whether your contracts are likely to be legally enforceable.
Before you can get an injunction, you will need to prove:
- That your former employee has gained an unfair advantage using your confidential information and/or
- They have acted in breach of post termination restrictions which prevent them from soliciting your customers/competing/dealing with your customers/poaching your staff
- There are well drafted provisions in the employee’s contract of employment which seek to prevent misuse of confidential information after the employment relationship has ended and post termination restrictions on their ability to solicit/deal with your customers or poach your staff or compete with your business. Also, that the employee has signed their contract of employment.
- The information that the former employee is using was unfairly obtained information from you or from your business.
That an injunction is required and damages for breach of contract won’t be sufficient.
How Do I Get a Springboard Injunction?
If you ever need to protect your business from the misuse of information or breaches of post termination restrictions, you should consider getting in touch with a law specialist with experience. We are experienced in enforcing post termination restrictive covenants and in the process for obtaining springboard injunctions. Once you become aware of the breach it is essential that you act without delay as any delay is likely to prejudice your chances of securing an injunction.
It’s important that you’re aware of your rights as a business owner, as the misuse of your confidential information can cause serious problems and financial losses for your business.