Legal News – Change in Legal Practices in regards to Non-Competition and Disclosure of Confidential Information

Lithuanian courts are changing the legal practice in cases of non-competition and disclosure of confidential information

 

On 28 May 2020, Court of Appeal of Lithuania adopted the significant decision No. e2A-860-464/2020 regarding the non-competition and disclosure of confidential information. It was noted that the fact, as itself, that an employee leaves the company and started to work in other competing company does not prove the disclosure of confidential information and unfair competition.

 

Previously, the Courts analyzing the similar cases, had noted, that if the employee terminated the employment contract and was employed in other competing company, the sales of previous employer reduced and in the meanwhile the income of the new employer increased, it was automatically considered as disclosure of the confidential information and unfair competition. It is clearly emphasized in the above mentioned Court‘s decision that it is very important to prove the damage itself, the dishonest conduct and the causal link between the conduct and the damage. Therefore, employment in the competing company and customers transition from one company to other, as action itself, does not prove, that the company suffers damage due to the employee‘s employment in the other company and his/her unfair competition.

 

Considering this, if the company wants that the employee does not compete, it is necessary to conclude the agreement of non-competition and compensate for non-competition during the employment and after the termination of the employment contract. In addition, we recommend having the list of confidential information approved by the employer and properly familiarize the employees who have confidentiality obligations.  It is not enough just to establish that the employee is obligated to keep information confidential. This is particularly important in the case of a dispute with the employee and proving his/her unfair competition and the disclosure of confidential information.

 

Please be informed that Leinonen’s Legal team can help when providing of wider legal consultation regarding this topic and preparing of necessary documentation related with protection of confidential information and proper non-competition obligation.

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