COBALT Estonia Labour Law Newsletter: Supreme Court ruling on the obligation to maintain trade secrets

At the end of 2024, the Supreme Court issued a landmark decision regarding employees’ duty to protect trade secrets. In the case at hand, the employment contract included a confidentiality obligation with a contractual penalty for breaches. Before leaving the company, the employee sent a large number of documents containing the employer’s trade secrets to their personal email address.

The dispute centred on three key issues:

• Whether the information in question was protected as a trade secret,
• Whether sending the documents was necessary for the employee’s work duties, and
• Whether sending documents to a personal email account qualified as personal use of trade secrets or whether additional proof of further use beyond the act of emailing was required.

The court ruled that sending an employer’s trade-secret-protected documents to a personal email account, when not required for job duties, constitutes personal use of the information. By doing so, the employee breached their confidentiality obligation, and the court imposed a substantial contractual penalty.

In light of this ruling, employers should review their employment contracts and internal rules on trade secrets and revise them if necessary. It is essential to clearly define what constitutes a trade secret and what obligations and restrictions apply to employees in safeguarding trade secrets in their possession. Employers should also ensure that confidentiality obligations are backed by a contractual penalty, as this has proven to be an effective legal remedy in practice.