HAYS SPECIALIST RECRUITMENT (HOLDINGS) LTD. v. IONS [2008] EWHC 745 (Ch)

This is similar to the U.S. requirement that the information must be treated or kept as a secret to be protected. Second, the information must have been provided in circumstances imposing an obligation of confidence, such as a contract. Third, the information must have been used in an unauthorized fashion to the detriment of the owner.

In the following case, a former employee of a U.K. recruitment firm posted information about its clients on LinkedIn, a popular job networking site. The recruitment firm sued the former employee for damages in court claiming a violation of trade secret law.

HAYS SPECIALIST RECRUITMENT (HOLDINGS) LTD. v. IONS [2008] EWHC 745 (Ch)

High Court of Justice (Chancery Division), United Kingdom

Hon. Mr. Justice David Richards

Hays [Specialist Recruitment (Holdings) Limited (Hays)] through its subsidiaries carries on business as specialist recruitment employment agencies and as providers of staff bureau services. The business is carried on in the UK and abroad[.] … Mark Ions was for six and a half years … an employee of … Hays …. Exclusive Human Resources Limited (EHR) is a company established by Mr. Ions which has since the termination of his employment with Hays been carrying on business in competition with Hays. It is not suggested that this is itself in breach of any contractual or other duty. The potential action against Mr. Ions and EHR would be based on allegations that while still an employee Mr. Ions copied and then retained confidential information concerning clients and contacts of Hays, that he and EHR have used that information in EHR’s business[.]

Mr. Ion’s employment with Hays commenced on 12 January 2001 as a recruitment consultant in the field of human resources and he was later promoted to a managing consultant. From September 2006 he specialized in placing training and similar personnel for a broad range of professional, public sector and commercial clients. He covered Leeds, Newcastle and Edinburgh. He is described in Hays’ evidence as “middle ranked.”

Mr. Ions’ contract of employment signed by him on 12 January 2001 required him to devote his whole time and attention during business hours to the business of Hays and to use his endeavours to promote Hays’ interests in every respect, giving at all times the full benefit of his knowledge, expertise and skill…. Clause 18 provided:

“You must not, during the course of your employment or at any time thereafter, make use of, or disclose or divulge to any person, firm or company, any trade secrets, business methods or information which you know, or ought reasonably to have known to be of a confidential nature concerning the businesses, finances, dealings, transactions, client database or other affairs of the Company or the Group or of any person having dealings with the Company which may have come to your knowledge during the course of your employment unless it is necessary for the proper execution of your duties hereunder, and you shall use your best endeavors to prevent the publication or disclosure of any such information.”

The material evidence as regards the transfer and alleged misuse of information may be summarized as follows. On 18 May 2007 Mr. Ions incorporated EHR and he does not dispute that he intended to carry on a competing business through it once he left Hays. When he gave notice on 8 June 2007, he made no secret of his intention to set up a competing business. Although his employment continued for 28 days, he was not permitted to work for Hays during that period. A later search of his e-mail account at Hays has shown that on 18 May 2007, Mr. Ions sent invitations to at least two clients or candidates of Hays to join his professional network with a website called LinkedIn. LinkedIn is similar in basic concept to social networking sites such as Facebook but is designed solely for the purpose of professional networking. A person joining LinkedIn, in this case Mr. Ions, registers and creates a profile page, with information about his employment and education history. Once registered, the member can use the site in a number of different ways for establishing contacts. The relevant method for present purpose is to upload e-mail contacts and LinkedIn will invite them by e-mail to join the member’s network. If the contact accepts the invitation, he or she becomes a “connection” whose contact details will be available to the other connections to the member’s network.

LinkedIn is widely used by recruitment companies. Mr. Ions gives evidence that he had been a member of LinkedIn for over a year, with the encouragement of Hays, and he exhibits a print-out which appears to show that other employees of Hays, including [Ions’ manager], were members for business purposes….

Ms. Sullivan alleges that on or around 18 May 2007 “Mr. Ions began a campaign of migrating confidential client and candidate contact details from the Applicants’ confidential database to his own personal account at the web facility Linked-In”[.] …Hays’ solicitors wrote on 5 September 2007 requiring a copy of all “business contacts” on Mr. Ions’ LinkedIn network before any steps were taken to delete them and warning him to preserve this evidence. In an unsigned witness statement received by Hays’ solicitors on 26 October 2007 Mr. Ions stated that he had arranged for the whole of his old LinkedIn network to be deleted, thereby destroying “any contact information that existed”, and that he had not separately maintained a copy of the contact list nor would he able to recreate it. However, the U.S. operators of LinkedIn retain the data and have agreed to preserve it.

The upshot is therefore that Mr. Ions had “Hays linked contacts” on his network. He has given no indication of numbers but they are likely to be more than a handful, because he says that he would not able to recreate the contact list. He states in his evidence that “all of the information was put on to the site during the course of my employment with the Applicants.” His case, denied by Hays, is that it was done with Hays’ consent and that once uploaded and once the invitation to join his network is accepted, the information ceased to be confidential because it was accessible to a wider audience through his network ….

[Mr. Ion’s attorney] submits that it is not Mr. Ions’ action in uploading e-mail addresses to LinkedIn, but the invitees’ acceptance to become connections, which resulted in the information becoming available on his network and it is not then confidential but publicly available, at least to his other connections. In my view, this breaks down at the first stage. If the information was confidential, it was Mr. Ions’ action in uploading the e-mail addresses which involved a transfer of information to a site where at least the details of those addressees who accepted his invitation would be accessible by him after his employment had ceased. The evidence suggests that he may have done so, not for the benefit of Hays but for the benefit of his post-termination business. If so, even if confidentiality in the information was thereafter lost, Hays may well have a claim against Mr. Ions….

[Mr. Ions] accepts that he had Hays linked contacts on his site. He has given no indication as to numbers, but it seems very likely to be more than just a few, and he has given no indication as to when he uploaded the contacts except that it was during his employment…. This is not a case of a former employee remembering some contact details after the termination of his employment. The transfer to his network occurred during his employment and the list was such that he could not recreate it once he deleted it….

In my judgment Hays has reasonable grounds for considering that it may have a claim against Mr. Ions as regards the transfer of information concerning clients and applicants by uploading it to his LinkedIn network while still employed by Hays and with a view to its subsequent use by him in his own business.

CASE QUESTIONS

  1. Hays already had a contract with Mr. Ions preventing disclosure of trade secrets. What could Hays have done, if anything, to prevent disclosure of their information on LinkedIn?
  2. During the last days of his employment, Ions conducted a number of what Hays considered to be “highly suspicious” searches of Hays’ database which contained business sensitive and confidential data on past, current, and prospective clients. Ions conceded that he performed the searches but that they carried out as part of his usual duties. How should this evidence affect this decision in this case?
  3. What responsibility, if any, does LinkedIn have to provide deleted information to Hays as part of its lawsuit against Ions? Is LinkedIn liable at all for Ions’ conduct?

The Online Employment Relationship

One of the most pressing Internet-related issues is an employee’s right to privacy in his or her correspondence and records at work. Unlike the relatively meager rights accorded to employees in the United States (discussed in Chapter 10), privacy rights for European employees are significantly more robust. Privacy for European employees in Europe has been traditionally linked with its powerful trade unions and a strong recognition of worker self-determination. Contrast this with the American system of employment at will, whose distinctive feature allows employers to punish or fire employees at almost any time and for a wide variety of reasons.

(Ferrera 454-456)

Ferrera, Gerald R., Margo E. Reder, Stephen Lichtenstein, Robert Bird, Jonathan Darrow,  Jeff. CyberLaw: Text and Cases. Cengage Learning, 01/2011. VitalBook file.

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