Russian courts are on the side of an employee...

An employee borrowed the client base of his former employer upon dismissal and transferred it to his new employer. The latter, carrying out similar activities, used the client base and entered into contracts with some clients for large sums of money.

The former employer considered that the employee, who had access to the customer database, had violated his labour contract and trade secret clause and applied to the court for recovery of direct actual damages from the employee.

The courts of three instances[1] dismissed the former employer's claims, as the plaintiff had failed to provide evidence meeting the requirements of sufficiency, relevance and admissibility, testifying to the disclosure or use by the defendant of information constituting the company’s trade secret. The plaintiff also failed to prove that he suffered direct actual damage by the defendant's actions. In particular, the courts noted the following circumstances:

  • the employer did not prove that the measures specified in part 1 of Article 10, Article 11 of Federal Law No. 98-FZ “On Commercial Secrets” were taken to extend the commercial secret regime to information in the client base and to protect confidential information within the framework of labour relations, despite the existence in the employee's labour contract of the obligation not to disclose commercial, technical, personal information that became known to him in the course of performing his work function, as well as the existence of a provision on commercial secrecy, which applies to the information on commercial secrets in the client base;
  • the existence in an employment contract of an employee's obligation to comply with the trade secret regime does not exclude the employer's obligation to establish measures to ensure such regime;
  • there is no causal link between the actions of the defendant and the resulting consequences in the form of actual damage for the plaintiff, and lost income (lost profit) is not subject to recovery from the employee. The fact that the defendant is currently in an employment relationship with another company engaged in similar activities, does not indicate the unlawfulness of his actions and the infliction of direct actual damage to the plaintiff. The conclusion by the new employer of contracts with several of the plaintiff's counterparties does not indicate that the defendant disclosed information constituting a trade secret and that the defendant caused direct actual damage to the plaintiff.

[1] Judgement of the First Cassation Court of General Jurisdiction No. 88-12649/2023 from April 17, 2023