Editor’s Note: Alex Dale is a member of the Litigation Section and Intellectual Property Practice Group of Ward and Smith, P.A.
Earlier this year, the Swiss-based bank Julius Baer & Company (“Baer”) sued Wikileaks.org, a website that boasts of having posted 1.2 million “leaked” government and corporate documents it claims expose unethical behavior, and Dynabot, the company providing the domain name for Wikileaks. Baer alleged that Wikileaks’ publication of confidential bank documents on its website constituted unlawful and unfair business practices, interference with contract, and conversion. Baer sought an order from the Court restraining Wikileaks from displaying, posting, publishing, distributing, linking, or otherwise providing any information concerning Baer’s bank records and other confidential documents.
Dynabot immediately capitulated and agreed to Baer’s request for the Court to enter a permanent injunction requiring Dynabot to disable one of the Wikileaks domain names, which effectively shut down the Wikileaks domestic website. In an attempt to prevent the information from coming back up on mirror websites, Baer also obtained a broad temporary injunction against Wikileaks which, among other things, prohibited publication of the documents Baer deemed confidential. Less than four weeks later, however, the same judge dissolved the permanent injunction against Dynabot and allowed the temporary injunction against Wikileaks to expire, in part due to concerns over Wikileaks’ First Amendment rights and the unconstitutional nature of prior restraints on free speech. Less than a week later, Baer dismissed the lawsuit.
For a technology company faced with a former employee “leaking” private company information, the Wikileaks case provides several lessons.
An Injunction Can do More Harm than Good
When Barbara Streisand tried to have a photo of her house removed from a collection of photographs on the Internet, the publicity from the lawsuit led to wide dissemination and viewing of the photo. What is now referred to as the “Streisand effect” also occurred in the Wikileaks case. The publicity from the injunctions eliminated any benefit Baer may have gained from having its confidential information temporarily removed from the Wikileaks website. The New York Times, Associated Press, and other media outlets all covered the story of the injunctions. Advocacy groups like the Electronic Frontier Foundation, Citizen Media Law Project, and The Reporters Committee for Freedom of the Press jumped on the case and filed documents with the court. Large media-related companies like the Los Angeles Times, Gannett, and the Associated Press criticized the injunctions. All of these responses resulted in, as an unintended side effect, far more attention to the existence of the confidential information on Wikileaks than the original posting.
An Overreaching Injunction May Not Be in Your Best Interest
The breadth of the injunctions issued in the Wikileaks case caused their eventual demise. If Baer had remained focused on its original goal of removing the confidential bank information from the web instead of using Dynabot’s capitulation as an opportunity to shut down an entire website, Baer would have had a stronger argument for keeping an injunction in place when confronted with a First Amendment challenge, despite the fact that even narrowly tailored prior restraints on free speech are disfavored. A company seeking an injunction to remove items from a website should proceed with caution to seek only the narrowest effective remedy, not a broad remedy that may generate outcries of censorship and constitutional violation.
Shutting Down a Particular Domain May Not Go Far Enough
The “permanent” injunction issued by the Court shut down http://wikileaks.org temporarily. This was not, however, much of an impediment to Wikileaks or a benefit to Baer as Wikileaks simply stepped around the injunction by posting the confidential bank information on Wikileaks’ international websites, including http://www.wikileaks.be, http://wikileaks.org.uk, http://wikileaks.cx, and http://wikileaks.in. Notwithstanding the temporary injunction entered by the Court, the confidential bank information remained available worldwide on the Internet through these mirror websites.
As a result, Baer was not able to eliminate, or even substantially hinder, access to the bank documents at issue. Instead, it triggered only wide interest in the confidential documents and caused substantial criticism to be heaped on the bank as well.
There May be Better Ways to Protect Confidential Information
A former employee of Baer provided the confidential information to Wikileaks for publication. Employers should require the return of all confidential information when an employee departs and specifically should address with departing employees the return of confidential information instead of merely expecting it to occur. Companies should have in place, and should enforce, policies and procedures prohibiting a disgruntled employee from leaving with any confidential information. A warning to departing employees about the potential negative consequences to them, both legally and professionally, from disclosing the company’s confidential information after their departure may be appropriate in certain situations.
When severance packages are provided to departing employees, it may be possible for an employer to secure effective contractual remedies by agreeing to pay additional money to a departing employee in return for a written promise not to disseminate confidential information after departure. Liquidated damages and other remedies could be inserted into such an agreement, especially if the departing employee is disgruntled or unusually upset about the circumstances leading to his or her departure, or if it is suspected that the departing employee may act on his or her frustrations about severing ties with the company.
Consider Focusing on Employees and Former Employees Rather than the Internet Publisher
Some employees depart a company without fully comprehending that disclosure of information obtained from their former employer might damage the employer, result in costly penalties for the ex-employee, or even be illegal. These same former employees may want to maintain a good relationship with their former employer. While companies need to make attempts to ensure that departing employees do not leave with confidential information, a company may be able to stop disclosure of such confidential information by taking the easy step of contacting the former employee and discussing the problem.
Many people actually want to do the right thing. A frank discussion with a former employee explaining the consequences of disclosure and the employee’s potential liability for disseminating confidential company information without permission may yield a positive outcome for the company without the attendant risks of litigation.
If the company cannot convince the former employee to stop disseminating confidential information voluntarily, litigation against the former employee may be necessary to stop it. However, depending on the facts of the situation, targeting the former employee, instead of the Internet publisher, may avoid the First Amendment hurdles encountered by Baer and may reduce the potential for the “Streisand effect.”
Injunctions can be harsh remedies, especially when they involve prior restraints on Internet publication. Any company seeking to shut down a website for publishing confidential company information should evaluate the practical effectiveness of such an injunction carefully as well as the likelihood of success in obtaining such a remedy without running afoul of the dreaded “law of unintended consequences.” Other non-litigation alternatives, such as solidifying internal controls to guard against retention of confidential information by departing employees and seeking negotiated resolutions with former employees to stop dissemination, may be more successful in achieving the goal of safeguarding private company information.
© 2008, Ward and Smith, P.A.
Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. Alex Dale practices in the Litigation Section and Intellectual Property Practice Group, where he concentrates his practice on commercial disputes, intellectual property litigation, and media law issues. Comments or questions may be sent to email@example.com.
This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.