HK court confirms scope of post-employment obligations
The High Court of Hong Kong recently dealt with an application for interlocutory relief concerning alleged breaches of employment agreements, highlighting significant issues around post-employment obligations and the protection of confidential information.
The case stemmed from a whistleblowing complaint received by a Hong Kong-listed company about potential misconduct by a former senior executive.
Following investigations, the employer commenced proceedings seeking various forms of interlocutory relief against former employees.
Employment agreement terms examined
The court examined an employment agreement signed in December 2012 between the company and its former senior vice president. The agreement contained specific provisions regarding confidentiality and inventions that continued after employment termination.
The confidentiality clause prohibited the disclosure of confidential information "during the continuance of this Agreement or at any time after the termination hereof." This included customer information, specifications, drawings, processes, and other technical data acquired during employment.
The invention clause specified that any invention discovered or conceived during employment that related to the company's business would belong to the employer absolutely.
The agreement stated: "If, at any time during the continuance of this Agreement, you shall discover, make or conceive, either by yourself or jointly with any other person or persons, any invention, discovery, formula, design, process, adaptation or improvement which relates to or is connected with... any trade or business for the time being carried on by the Company, you shall promptly submit the full particulars thereof in writing to the Company."
Court's assessment of protection
In examining whether to grant interlocutory relief, the court considered established principles regarding the protection of confidential information.
The court noted that information warranting protection must be:
"Information which (a) is used in a trade or business; (b) is confidential in that it does not exist in the public domain; (c) can be isolated from other information which the employee would be free to use without any reasonable person thinking that it is improper; (d) would be of use to a competitor, or cause real or significant harm to the owner."
Identification of employer’s confidential documents
The court granted interlocutory prohibitory injunctions and delivery up orders but declined to grant disclosure orders. In reaching this decision, the court found that requiring identification of every confidential document would be "unnecessary," "disproportionate," and "unfair and oppressive" given the circumstances.
The court emphasized that while employees can use their general skills and knowledge after employment ends, specific confidential information may warrant protection if it meets the required criteria.
This assessment requires examining "the nature of the employment, the character of the information, the restrictions imposed on its dissemination, the extent of use in the public domain and the damage likely to be caused by its use and disclosure in competition to the employer."
However, the court declined to grant disclosure orders, noting they would be "contrary to normal adversarial civil litigation" and involve compelling defendants "to set out their wrongdoing on an accelerated basis."
The court instead ordered that the disclosure application be adjourned with liberty to restore, depending on what would be delivered up by the defendants.
