Former Healthcare Company CEO Fends Off Database Piracy Claim

Customer databases are the lifeblood of many businesses, taking a great deal of time and money to compile. They can, however, be pirated in a matter of seconds and, as one High Court case showed, that can give rise to departing employees falling under suspicion.

The case concerned a private healthcare company that had spent about £2 million establishing a network of medical consultants, whose details, including phone numbers, email addresses and fields of specialisation, were stored on a database. Following the departure of its CEO, the company suspected that he had extracted the whole, or a substantial part, of that database for his own purposes.

The company launched proceedings under the Copyright and Rights in Databases Regulations 1997 against the former CEO and two accountancy practices with whom he was alleged to have shared the extracted data. The practices, which provided advice to members of the medical profession, were said to have been aware that the data had been unlawfully extracted and to have used it to make contact with consultants for the purpose of soliciting business.

In ruling on the dispute, the Court noted that the company was not in the business of providing tax or consultancy advice to doctors, although its two founding directors owned another company that was. None of the restrictive covenants in the former CEO’s employment contract forbade him from working in accountancy following his departure.

In dismissing the company’s claim, the Court noted that there was no evidence from any eyewitness of any wrongdoing by the former CEO. Although there were striking similarities between parts of the company’s database and a target list of consultants that was in the former CEO’s possession, the Court accepted that he had compiled the latter from his memory. Describing his evidence as accurate and reliable, the Court found that neither he nor the accountancy practices had extracted or made use of the company’s database.

Intellectual property and commercial intelligence can be extremely valuable and firms should always ensure that they take all available steps to protect both.

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For advice on protecting your IP or enforcing IP rights that have been violated, contact us.