Legal disputes over data theft soar to record high, report claims

The number of High Court legal disputes over theft of data from businesses has reached a record high according to a report, with the use of cloud storage services making it easier for confidential data to be taken.

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The number of High Court legal disputes over the theft of data from businesses has reached a record high, according to a report, with the popularity of cloud storage services making it easier for confidential data to be taken.

The number of legal disputes taken to the High Court grew by 58 percent last year, according to commercial law firm EMW, with 167 cases during 2012, up from 106 in 2011 and 45 in 2010.

The majority of these cases are said to have been businesses launching civil claims against former employees, aiming to prevent them from using confidential data taken from company databases.

Mark Finn, principal at EMW, believes that part of the reason for the increase in businesses taking action against employees is that it is has become even easier for staff to move information outside the business, thanks to the popularity of cloud storage systems such as DropBox.

“The boom in cloud computing and the widespread use of services like Dropbox have made copying a large database something that can be accomplished by virtually anyone in seconds,” Finn said.

Finn added that many of the cases which have appeared in court have concerned financial services firms, estate agents and recruitment businesses which have had databases of contacts taken over to rival firms by disgruntled employees. This has become more of a problem as the tough economic climate of the past years has meant that more staff have been movng from one company to another.

“Employment contracts are generally very clear on this issue – all know-how, databases and other forms of intellectual property developed by staff during their work time is the property of the employer," he said. "Occasionally, disgruntled staff may misguidedly feel they have a ‘moral right’ to take data they have developed. This simply is not the case.”

He said that while data breaches were previously considered an unfortunate cost of doing business, firms are becoming more inclined to take legal action. 

“A lot of firms in the financial and professional services sectors are heavily reliant on their comprehensive databases of contacts. These may have been built up over several years, and employees can give a new employer a huge jump start by taking a copy of it as they leave,” Finn said.

“As the economy improves and businesses increasingly see employees leave to join rivals, they will have no choice but to undertake potentially lengthy and costly legal action to protect their interests.

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