Home > Resource Centre > Publications > Publication

Never has the old adage "knowledge is power" been more true than in the modern business era where know-how is often a company's most valuable asset. But what can an employer do when it suspects that company know-how is being used for an employee's personal gain, or worse, a competitor's advantage?

An employer's ability to protect confidential information in the workplace is critical and two recent decisions of the Ontario Superior Court of Justice[1] go a long way in strengthening the arsenal of legal remedies available to employers in Ontario.

ANTON PILLER ORDERS

Anton Piller orders have been described as a form of "civil search warrant" permitting a plaintiff to enter a specified location and seize documents or other property without notice to the defendant where there is a concern over the preservation of evidence.[2]

To obtain an Anton Piller order a party must show:

1. a strong or extremely strong prima facie case for the substantive relief grounding the request for the order (in the intellectual property law context, that intellectual property rights have been infringed);
2. that very serious potential harm could occur if the order is not granted;
3. that the other party has in its possession the documents or other items to be seized; and
4. that there is good reason to believe that the other party will destroy the items to be seized if given notice of the motion.[3]

In Ridgewood Electric Limited v. Robbie, the plaintiff company, Ridgewood, obtained an Anton Piller order which authorized the entry and searches of the homes of two former Ridgewood employees, Robbie and Mitchell. The former employees, both of whom had signed employment contracts containing non-competition clauses, were alleged to have taken Ridgewood's property which they were using for their own benefit. The order was executed on the residences of both former employees and material belonging to Ridgewood was seized pursuant to the order.

Robbie brought a motion before the Court to set aside the order and for the return of the material seized during the search. Robbie also sought damages for himself and his family in connection with the execution of the search.

Robbie's motion was dismissed. Ridgewood was found to have a strong prima facie case that Robbie had wrongfully taken its information and copyright material and the Court approved the order even in the face of a number of transgressions in the execution of the order, including the fact that Robbie was effectively denied the opportunity to consult counsel.

Importantly, the Court took the opportunity to review the safeguards devised by the English Court of Appeal in the original Anton Piller decision.[4] Corbett J. suggested these safeguards needed to evolve to reflect technological change in the past 30 years and the broadening context in which such orders are used.

Corbett J. acknowledged that while an Anton Piller order remains an "extraordinary" and relatively "rare" remedy, its use in the employment context is becoming more common, particularly in protecting businesses from disgruntled or departing employees who are able to secrete business documents on a home or portable computer or on easily portable disks or tapes. Corbett J., therefore, gave the nod to the use of Anton Piller orders in the search of "intimate private spaces" such as private dwellings, vehicles and luggage.

While acknowledging that Anton Piller orders will only be effective if they can be enforced with speed and with an element of surprise, Corbett J. recognized the need to ensure that they are not used to create an atmosphere of intimidation and oppression. He noted that the employer/employee relationship is already characterized by an imbalance of resources, knowledge and expertise and so Corbett J. suggested that the following safeguards should be adhered to in order to ensure the proper administration of justice:

• Anton Piller orders must always be authorized in advance by a court;
• Anton Piller orders should be executed by a peace officer properly trained in the execution of search warrants;
• the materials seized should be listed and safely retained by a non-party in a manner that respects claims of privilege until such time as the matter comes back before the court for review; and
• courts must carefully scrutinize the execution of these orders.

INTERLOCUTORY INJUNCTIONS

Much to the chagrin of employers, interlocutory injunctions, orders compelling a party to cease an activity and maintain the status quo, have become increasingly difficult to obtain. While moving parties usually have little difficulty convincing a court that they have a serious issue to be tried and that the balance of convenience favours the grant of an injunction, courts do not consider damages that can be quantified and collected to constitute "irreparable harm", leaving the third element of the test for obtaining an interlocutory injunction extremely difficult to meet.

The decision of Pitt J. in Courier Complete Inc. v. Fraidakis is, therefore, welcome news for employers. In Courier Complete, the plaintiff employer brought a motion against an employee, Fraidakis, seeking delivery up of a computer software program that Fraidakis had written during the course of his employment. Although Fraidakis was an employee of the plaintiff company when he wrote the program, he claimed to have written the program at home on his own time. Two days before a scheduled demonstration of the program, Fraidakis asserted ownership over the program and demanded a bonus which the employer refused to pay.

The software program at issue was an independent compilation of source code functions that transferred and received data regarding the status of shipments by couriers' shippers. The software served to integrate the employer's software with that of the major courier systems - a goal the company president had been trying to achieve for some time but without success. Fraidakis was aware of the president's interest in such a project, although he was not assigned to work on it.

Pitt J. granted the employer's motion for an interlocutory injunction preventing Fraidakis from using the program and requiring him to preserve it and any related materials until further order of the Court.

Pitt J. found that there was a strong prima facie case for entitlement on the part of the employer based on Section 13 of the Copyright Act which states that where work is authored by an employee in the course of employment, the employer shall be the first owner of the copyright of the work unless there is an agreement to the contrary. Fraidakis argued that an employee owns the copyright in a work if the employee does not write the work during the course of his employment. Noting that Fraidakis was inspired to write the program while working on a specific project for the company and that he had used his connections at work to obtain confidential information, including contacts and codes, for use in creating the software, Pitt J. rejected the employee's assertion that he had written the program strictly at home on his own time.

In weighing the balance of convenience, Pitt J. found that the balance favoured the employer. Although Fraidakis would likely suffer significant harm if the injunction was granted, he could find other suitable employment # at least until the resolution of the matter # whereas the employer would be deprived of the fruits of an asset to which it appeared to have a prima facie statutory right.

[1]. Ridgewood Electric Limited (1990) v. Robbie (2005), 74 O.R. (3d) 514 (Ont. S.C. J.) per Corbett J. ("Ridgewood") and Courier Complete Inc. v. Fraidakis (2005), 40 C.P.R. (4th) 50 (Ont. S.C.J.) per Pitt J. ("Courier Complete").

[2]. Fila Canada Inc. v. Jane Doe (1996), 68 C.P.R. (3d) 1 (F.C.T.D.).

[3]. Ridgewood, supra at 523.

[4]. Anton Piller K.G. v. Manufacturing Process Ltd., [1976] 1 All. E.R. 779 (C.A.).

The purpose of this document is to provide information as to developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Ogilvy Renault LLP or any member of the firm on the points of law discussed.

 Back to Publications

Contacts

David J. Bannon
Toronto
416.216.3907
dbannon@ogilvyrenault.com
Profile

Randy C. Sutton
Toronto
416.216.4046
rsutton@ogilvyrenault.com
Profile

Allyson Whyte Nowak
Toronto
416.216.4096
awhytenowak@ogilvyrenault.com
Profile