Employers keep ownership of what you create

SUSAN HORNSBY-GELUK
Last updated 05:00 17/06/2014

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OPINION: Many  of us spend a large part of our lives at work, and it is natural that we feel a sense of pride and even ownership in what we produce. But, what happens when we leave our employment - can we take what we have created with us? And what happens if an ex-employer has a problem with this?

A recent case before the Employment Relations Authority highlights the pitfalls for employees of attempting to remove the fruits of their labour from their employer. James Watchorn was employed as an engineer by Tag Oil, an oil and gas exploration and mining company. As a result of a chance meeting with a competitor of Tag Oil, Watchorn accepted a role with that company and promptly resigned from his employment with Tag Oil.

Watchorn worked from home from time to time and had copies of many of Tag Oil's documents on his personal hard drive. After tendering his resignation, he proceeded to copy a large number of Tag Oil's documents and information on to his hard drive. So much information was copied that if it was all printed out, the stack of papers would have been as high as 40 Auckland Sky Towers.

After Watchorn had left, Tag Oil discovered he had taken these documents, and was particularly concerned given that some of what had been copied included geotechnical information that would have been valuable to competitors. It began legal action against Watchorn to recover the information.

Watchorn explained to the authority that he believed he was copying templates and precedents rather than his employer's confidential information. He said that throughout his career he had retained documents he had created during the course of his employment and that he thought this was standard practice in the oil and gas industry.

Watchorn advised that he was not aware there were any issues with him taking such information until Tag Oil began legal proceedings against him.

All employees owe their employer a number of legal duties. These include a duty of fidelity and of confidentiality. However, it seems that not many employees understand what these obligations mean in practical terms, as evidenced in the case of Watchorn.

The duty of fidelity requires an employee to act in the best interests of their employer at all times. This includes not taking the employer's property or using its resources for personal gain or the benefit of third parties, such as a new employer. The duty of confidentiality requires employees to keep their employer's information confidential unless it is already in the public domain, and not to share it with third parties.

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Watchorn was found to be clearly in breach of his obligations to Tag Oil for taking documents that were his employer's property. His explanation that he himself had created some of the documentation was no justification. As an employee, when you create any documents, processes or ideas in the course of your employment, that piece of work will generally automatically become your employer's property. That is part of what it means to be an employee, and to receive payment from your employer for what you produce.

Although Tag Oil could not establish that it had suffered any specific damage as a result of Watchorn's actions, it was awarded more than $65,000 in special damages. Watchorn was also ordered to pay $12,000 in penalties for breaching his contractual obligations.

This case serves as a warning to employees that you cannot walk away with your employer's information or property without permission. This applies even if you created that information, template or other output. The consequences of failing to understand these obligations or comply with them can be dire, as Watchorn found out.

Worse still, Watchorn is now the subject of criminal charges as a result of his actions.

For employers, while the case highlights that they can exercise their legal rights against an employee, having some security measures in place around the ability to access and copy sensitive information might have gone a long way to avoid costly and lengthy legal proceedings.

A further sensible step would be to ensure that all employees are advised of and reminded of their obligations of fidelity and confidentiality. This should occur when they start (in their employment agreement) and when they leave (by way of a letter of reminder).

This should not be viewed as demonstrating a lack of trust in an employee and in fact happened in this case. It is a pity that Watchorn did not heed Tag Oil's warning to him, as he is now paying the price.

Susan Hornsby-Geluk, partner, Dundas Street Employment Lawyers, dundasstreet.co.nz

- Stuff

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