• At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
  • Kemp Little specialises in the technology and digital media sectors and provides a range of legal services that are crucial to fast-moving, innovative businesses.Our blend of sector awareness, technical excellence and responsiveness, means we are regularly ranked as a leading firm by directories such as Legal 500, Chambers and PLC Which Lawyer. Our practice areas cover a wide range of legal issues and advice.
  • Our Commercial Technology team has established itself as one of the strongest in the UK. We are ranked in Legal 500, Chambers & Partners and PLC Which Lawyer, with four of our partners recommended.
  • Our team provides practical and commercial advice founded on years of experience and technical know-how to technology and digital media companies that need to be alert to the rules and regulations of competition law.
  • Our Corporate Practice has a reputation for delivering sound legal advice, backed up with extensive industry experience and credentials, to get the best results from technology and digital media transactions.
  • In the fast-changing world of employment law our clients need practical, commercial and cost-effective advice. They get this from our team of employment law professionals.
  • Our team of leading IP advisors deliver cost-effective, strategic and commercial advice to ensure that your IP assets are protected and leveraged to add real value to your business.
  • Our litigation practice advises on all aspects of dispute resolution, with a particular focus on ownership, exploitation and infringement of intellectual property rights and commercial disputes in the technology sector.
  • We have an industry-leading reputation for our outsourcing expertise. Our professionals deliver credible legal advice to providers and acquirers of IT and business process outsourcing (BPO) services.
  • We work alongside companies, many with disruptive technologies, that seek funding, as well as with the venture capital firms, institutional investors and corporate ventures that want to invest in exciting business opportunities.
  • Our regulatory specialists work alongside Kemp Little’s corporate and commercial professionals to help meet their compliance obligations.
  • With a service that is commercial and responsive to our clients’ needs, you will find our tax advice easy to understand, cost-effective and geared towards maximising your tax benefits.
  • At Kemp Little, we advise clients in diverse sectors where technology is fundamental to the ongoing success of their businesses.They include companies that provide technology as a service and businesses where the use of technology is key to their business model, enabling them to bring their product or service to market.
  • We bring our commercial understanding of digital business models, our legal expertise and our reputation for delivering high quality, cost-effective services to this dynamic sector.
  • Acting for market leaders and market changers within the media industry, we combine in-depth knowledge of the structural technology that underpins content delivery and the impact of digitisation on the rights of producers and consumers.
  • We understand the risks facing this sector and work with our clients to conquer those challenges. Testimony to our success is the continued growth in our team of professionals and the clients we serve.
  • We advise at the forefront of the technological intersection between life sciences and healthcare. We advise leading technology and data analytics providers, healthcare institutions as well as manufacturers of medical devices, pharmaceuticals and biotechnological products.
  • For clients operating in the online sector, our teams are structured to meet their commercial, financing, M&A, competition and regulatory, employment and intellectual property legal needs.
  • Our focus on technology makes us especially well positioned to give advice on the legal aspects of digital marketing. We advise on high-profile, multi-channel, cross-border cases and on highly complex campaigns.
  • The mobile and telecoms sector is fast changing and hugely dependent on technology advances. We help mobile and wireless and fixed telecoms clients to tackle the legal challenges that this evolving sector presents.
  • Whether ERP, Linux or Windows; software or infrastructure as a service in the cloud, in a virtualised environment, or as a mobile or service-oriented architecture, we have the experience to resolve legal issues across the spectrum of commercial computer platforms.
  • Our clients trust us to apply our solutions and know-how to help them make the best use of technology in structuring deals, mitigating key risks to their businesses and in achieving their commercial objectives.
  • We have extensive experience of advising customers and suppliers in the retail sector on technology development, licensing and supply projects, and in advising on all aspects of procurement and online operations.
  • Our legal professionals work alongside social media providers and users in relation to the commercial, privacy, data, advertising, intellectual property, employment and corporate issues that arise in this dynamic sector.
  • Our years of working alongside diverse software clients have given us an in-depth understanding of the dynamics of the software marketplace, market practice and alternative negotiating strategies.
  • Working with direct providers of travel services, including aggregators, facilitators and suppliers of transport and technology, our team has developed a unique specialist knowledge of the sector
  • Your life as an entrepreneur is full of daily challenges as you seek to grow your business. One of the key strengths of our firm is that we understand these challenges.
  • Kemp Little is trusted by some of the world’s leading luxury brands and some of the most innovative e-commerce retailers changing the face of the industry.
  • HR Bytes is an exclusive, comprehensive, online service that will provide you with a wide range of practical, insightful and current employment law information. HR Bytes members get priority booking for events, key insight and a range of employment materials for free.
  • FlightDeck is our portal designed especially with start-up and emerging technology businesses in mind to help you get your business up and running in the right way. We provide a free pack of all the things no-one tells you and things they don’t give away to get you started.

Hot property: defending IP when employees walk away

Imagine if a key employee, who had worked for an organisation for 15 years, announced his retirement, only to recommence work a year later with the organisation's closest competitor. Or if, within the space of four months, three members of a research and development team resigned in order to join the same start-up. These scenarios might well raise red flags that there has been unlawful activity or intellectual property (IP) infringement, but how should a company go about investigating and reacting to these scenarios?

If an employee's departure raises concerns, the key is to act quickly and co-ordinate the investigation across the company. It is usually, but not always, the in-house legal team that carries out this co-ordinating role, pulling in different parts of the company, including senior executives, HR, IT and public relations (PR).

Employment contracts

One of the first actions to take is to consult the departing employee's employment contract. This can be led by HR, in conjunction with the in-house legal team. Ideally, there should be clear obligations on the departing employee relating to:

Protection of confidential information.

  • Assignment of all IP created by the employee to the company, on creation.
  • Delivery up of all confidential information, IP and IT equipment.
  • Non-solicitation of customers and employees.
  • Non-compete provisions.

It is worth bearing in mind that, while the latest version of the employment contract being used by HR may contain all of the desired IP and confidentiality protection, some of the longest-serving key employees may be on old employment contracts that contain less stringent legal protections. It is therefore worth periodically performing an audit of the employment contracts for key employees to identify those high-risk contracts.

Simultaneously, HR should also look to see if any specific terms were agreed with the departing employee relating to his exit.

Internal communications and disclosure

As soon as litigation against the departing employee becomes even a possibility, the company is under an obligation under the Civil Procedure Rules to preserve all documents relevant to the dispute, including those that prejudice its own case. The in-house legal team should therefore send round a "litigation hold" email as soon as possible, informing colleagues of the impending litigation and requiring key documents to be preserved.

The duty to preserve documents extends to electronic documents that would otherwise be deleted in accordance with the company's document retention policy or in the ordinary course of business. The in-house legal team should therefore liaise with the IT team to ensure that all electronic data relevant to the dispute, including deleted data and metadata and backup servers, are preserved.

This duty to preserve documents is a continuing duty, which means that the company needs to be careful about internal communications as these may also be disclosable. During this investigation period, the HR and IT teams may be communicating with each other; for example, with regard to what IP they believe the departing employee might have taken, and whether they consider it to be confidential. These emails could harm the company's legal case if they have to be disclosed. The in-house legal team should therefore control what documents and notes are created at this time and instruct the investigatory team on how to ensure that any documents they create benefit from legal privilege.

As well as thinking about the documents that the company may have to disclose, it pays to think early on about what documents might be useful from the other side too. It is common to seek disclosure of the departing employee's personal laptop, USB sticks and text messages sent on personal and business mobile phones, in order to build up a fuller picture of what wrongdoing might have taken place. A company can also make a number of court applications in order to protect or gain early sight of key documentary evidence. These include an order for pre-action disclosure, a search and seizure order, a freezing order, or a Norwich Pharmacal order.

Forensic examination

Forensic analysis is important to try to establish an evidence trail linking the departing employee to an unlawful act of IP infringement.

A key mistake that companies often make is to ask the internal IT team to carry out an initial investigation on the departing employee's laptop or other devices. This can lead to key evidence not being preserved, for example, "date last modified" data for files. Not only does this compromise the evidence trail, it also means that the company risks failing to preserve key evidence. Anyone within the company who carries out an initial forensic IT investigation should be willing to give a witness statement about the steps they carried out, therefore, it is best to avoid instructing junior IT assistants who may not want to be witnesses in a later court claim.

It can be worth getting a professional forensic examiner on site, at an early stage, to preserve evidence (by taking image copies of the devices) and to prepare an expert report that can be used in any subsequent court proceedings. Internal IT teams still play a vital role in terms of liaising with the external expert (see box "Preserving IT evidence").

Legal action and remedies

Once the forensic examination has uncovered evidence as to which IP might have been taken, it falls to the in-house legal team and external counsel to decide what causes of action might exist against the employee and which remedies to pursue.

Usually a company will rely on breach of confidence, however, it pays to think widely about what IP infringements the departing employee might have committed. For example, a departing employee who copies emails from key clients onto his personal USB stick not only commits a breach of confidence, but also a copyright infringement each time that employee copies and pastes the content onto a USB and then downloads them onto his laptop, or uploads them on his new employer's servers. It is therefore worth consulting an IP specialist to make sure that legal claims are cast as far and wide as possible.

It is a well-established legal principle that departing employees can take know how they have acquired during the course of their employment to their new employer, however, they cannot use trade secrets. There is no fixed legal definition for what amounts to a trade secret but it is likely only to include information with a very high degree of specificity and confidentiality such as secret processes of manufacture like chemical formulae, designs or special methods of construction (see feature article "Trade secret protection: guarding against a global threat", www.practicallaw.com/5-637-7032). Many companies are caught out by the fact that they do not consider in advance what trade secrets are key to the business and do not protect them accordingly, for example, by limiting their disclosure to a limited number of individuals within the company.

As well as considering potential causes of action, it is also important to consider what remedies are important to the company. Typically, a company will seek damages for lost profits, lost customers and increased recruitment fees, or alternatively an account of profits from the other side. For this reason, it is often worth including the new employer of the former employee as a co-defendant in any legal claim because the new employer may be vicariously liable.

The most valuable remedy can be an injunction: this can be sought at an early stage in proceedings to keep the former employee and the new employer from using the IP and confidential information, or to mandate the delivery up of the IP and confidential information. If granted, an injunction can have significant commercial implications for the former employee as well as the new employer. Injunctions therefore tend to be a strong inducement to settle the case early on.

Taking court action can be very helpful in conveying a public message of strength, that is, that the company will protect its IP assets at all costs. However, litigation is not always the favoured option: some companies may prefer to avoid the publicity of employees leaving and instead to channel their efforts into bringing forward their latest product launch date and, for example, being the first to bring their product to the market.

Internal and external PR

It is highly likely that customers will hear about any significant employee or team moves and the company will need to consider how to convey a message to those customers, and the market more widely, about how those departures are being handled.

As well as external PR, the company should also manage the morale of the remaining workforce which may be deflated following the exit of a significant employee or team. As far as possible, any issues should be contained to avoid further resignations and escalation of the situation into a larger-scale team move.

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com or call 020 7542 6664.