Adele Whaley

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Protecting invaluable company assets through injunctions

Disputes / 18 May 2021

Global advisory, broking and solutions company, Willis Towers Watson Plc (WTW) recently had to apply for an emergency injunction against 25 of its former employees in order to protect some of its invaluable company assets. We share details of this case below as well as outlining some of the ways you could help to protect your company and its assets through injunctive relief.

WTW’s injunction
WTW recently applied to the US courts for a temporary injunction against Lockton (a competitor), and former WTW employees alleging breaches of restrictive covenants (non-solicitation clauses) and the misuse of confidential information.

Alarm bells were raised for WTW when 25 of its employees within the same Corporate Risk and Broking division all resigned with 24 hours of one another, with the loss of at least 25 clients.

The Circuit Court in Florida agreed with WTW and granted a temporary injunction preventing Lockton from acting for a select list of WTW’s clients for a period of 24-months. The Circuit Court also ordered that Lockton must not take advantage of any confidential information obtained by WTW’s former employees during their employment with WTW.  As with all temporary injunctions, full-court proceedings against the employees and Lockton will continue unless and until a settlement is reached.

Protecting valuable company assets
A company’s clients and confidential information, which often includes technical know-how, are often its most valuable assets and, on occasions, these assets need protection to prevent potential loss of revenue, reputational damage and/or brand damage.  The protection available may include the following:

—  Protecting business relationships – an employer seeking to enforce a restrictive covenant, such as a non-solicitation clause, can seek an interim injunction from the Court which prevents an employee from breaching the covenant or from taking advantage of a breach that has already taken place. This option is an important one as it can restrict an employee from starting a new job within a specified locality or sector for a particular period of time and/or from soliciting former clients, employees and/or suppliers.  However, in order to be enforceable, restrictive covenants need to be very carefully drafted. Our Employment team can provide expert advice in this area.

—  Protecting confidential information – interim injunctions are often required to stop a wrongdoing party (who may still be an employee) from misusing confidential information they may have acquired during the course of their employment. Confidential information is usually extremely valuable to a company and its business model, which it would not want to fall into the hands of a competitor. Clear drafting of confidentiality clauses in employment contracts and service agreements is vital to help minimise the risks associated with the misuse.  Again, our Employment team can provide expert advice in this area.

—  Protecting intellectual property – the Court can make an order prohibiting a person or organisation from doing certain things which would infringe the rights of an intellectual property owner.  Intellectual property rights are often another important company asset.

— Protecting against defamatory comments –  interim injunctions can also prevent a party from making further defamatory comments and/or from continuing to publish defamatory material.  This option can be particularly important when a company is looking to protect the reputation of its brands.

It is important to remember that an injunction is granted at the discretion of the Court. It is not available in every case. The draconian nature of an injunction means there are strict rules in place to determine whether a party will be entitled to an injunction.  Also, any application for an injunction must be issued promptly otherwise the right to injunctive relief can be lost. You can read our previous update about an injunction case involving West Ham United FC here.

Although the costs of applying for an injunction can be high, the rewards in terms of minimising damage to a business and protecting its assets can be invaluable.

Our Disputes team is highly experienced and well-structured to tackle emergency injunctions and other applications for interim relief swiftly and cost-effectively. We have previously applied for and defended several applications for interim injunctions including preventing the misuse of confidential information and securing delivery-up of company assets for a business in the water utility sector and multiple claims involving the enforcement of restrictive covenants involving former employees.

 

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This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: mailinglists@greenwoodsgrm.co.uk

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