Permanent Restraint for Former Employee Who Set Up Rival Business

In the recent case of APT Technology Pty Ltd v Aladesaye; In the Matter of APT Technology Pty Ltd (No 2) [2016] FCA 203; the Federal Court held Mr Aladesaye, a former employee of APT Technology (‘the Employer’), to be permanently restrained from disclosing the Employer’s confidential information and/or intellectual property.

Mr Aladesaye was summarily dismissed prior to the Employer taking action in court, after almost 6 years of service, as it came to light that he had set up a business in competition with the Employer and in doing so, had made use of its confidential information in breach of the express terms of his contract of employment and his common law and statutory duties.

Mr Aladesaye’s employment contract with the Employer contained clauses which effectively required him to:

  • devote his time and energy to the employer;
  • refrain from direct or indirect involvement in or with any similar or competing business;
  • refrain from copying, retaining or reproducing any confidential information of the employer; and
  • agree that intellectual property created during his employment was the property of the Employer.

Mr Aladesaye was operating a rival business out of the Employer’s previous office, which had been closed to cut costs. He had also, in the course of establishing the rival business, ‘”persuaded” the employer to sell to him the company’s monitoring equipment, without disclosing that he was the purchaser of such equipment.’

Computer analysis further showed that Mr Aladesaye had copied the Employer’s database, had sent confidential emails including the Employer’s template documents to his personal email address and to an email address for his rival business, and that he had provided new clients with reports using the Employer’s templates.

In addition to the restraint, Justice Foster ordered Mr Aladesaye to pay half of the Employer’s costs of the proceedings, remarking that the Employer was justified in bringing the proceedings however it went to extravagant efforts to obtain evidence to establish the extent and quality of Mr Aladesaye’s breaches, the cost burden of which ought not to be shouldered by Mr Aladesaye.

If you would like more information on restraints, or protection of confidential information and intellectual property generally, please contact Nick Stevens, Megan Cant or Jane Murray.

Published April 2016

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