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Wednesday, 20 June 2007

Ex-employee gets a pounding from Penn(y)Well

Is it Pennywell, as the text reads, or PennWell? The IPKat thinks the latter. He's talking about PennWell Publishing (UK) Limited v Isles and others, a Queen's Bench Division from Judge Justin Fenwick QC on Monday, 18 June, which was picked up by the LexisNexis Butterworths subscription-only service.

PennWell was a business to business media company that ran conferences, exhibitions and research covering strategic global markets. The first three defendants were PennWell's employees - the third playing an important role as a publisher and conference chairman: his employment contract provided that he should not, while employed by PennWell, be involved in any other job or business. In 2005 the second and third defendants decided to set up a company (the fourth defendant), which provided similar strategic information to that of PennWell. In July 2006 the first three defendants resigned from PennWell, though the third defendant agreed to stay on until after a major conference which he planned and was to chair. In August 2006 PennWell checked out the third defendant's laptop and found he had accessed PennWell's server, copying 18 of its files on to a CD. The copied data included many email addresses for international power industry members and contact information of participants at previous conferences. Isles (the first defendant) attended the conference, where he solicited some of PennWell's business customers. In September 2006 the third defendant left his position with PennWell; after all the defendants had also left, it emerged that the first and second defendants had removed quantities of confidential information while still employed.

PennWell sought an interim order for the return of its property, including any information in hard or electronic copy. After the claims against the first, second and fourth defendants were compromised, PennWell proceeded against the third defendant, maintaining that the contact information had been prepared and maintained on its computers during and for the purposes of his employment: the information was confidential - and it belonged to the company. The third defendant submitted that the database was a combination of personal contacts that he built up over his career and which was his to keep.

The court ruled in favour of PennWell . In the judge's opinion

* the third defendant breached an express term of his employment contract. The fourth defendant was a 'business' within the meaning of the employment contract and the third defendant had an interest in that business.

* the third defendant was in breach of his duty of good faith and fidelity and had put himself into a clear conflict of interest, because his interest in Isles making use of the conference to promote the fourth defendant was in direct conflict with Pennywell's aims in the running of that conference.

* PennWell owned the database since it had been created on its computer and the defendant was entitled neither to the exclusive nor to the shared use of it.

* given the number of contacts in the database, it was not just a list of journalistic contacts but the wholesale exportation of PennWell's database.

* PennWell was entitled to the delivery up of the database and to a permanent injunction preventing use of it, except regarding individual items that may have been known to the third defendant by other means.
The judge added that, where an address list is contained on the employer's email system and is backed up by the employer, it will belong to the employer. Such lists may not be copied or removed in their entirety by employees for use outside their employment or after their employment comes to an end. Since many employees may not realise this, employers should establish an email policy and make sure their employees know about it.


Says the IPKat, although this decision is not exactly rocket-science, there are relatively few decisions coming to light in England and Wales that clarify the relative rights and duties of employers and employees in databases and email lists in our current technological phase, so this note is welcome. Merpel says, now that PennWell has got its interim relief, recovered its data and established its entitlement in principle, may we assume that this little spat will not trouble the courts any further?

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