Background
An employee of Fluides Service Distribution (FSD) resigned effective September 28, 2018, and joined its competitor, Electronics & Pool Accessories Import (EPAI), on October 1, 2018. His employment contract was transferred in 2019 to EPAI’s subsidiary, later renamed Global Solution Industrial Supplier (GSIS).
In 2021, FSD sued EPAI and GSIS for damages, alleging unfair competition based in part on their possession of confidential FSD information taken by the former employee. A bailiff’s inspection found on the employee’s EPAI-provided work laptop an FSD Excel file titled “2017 Customer Satisfaction Survey,” containing customer contact details, as well as several model price offers sent to Unicaf Bolloré. The Toulouse Court of Appeal nevertheless rejected FSD’s claim against GSIS and awarded only €283 against EPAI for economic loss, reasoning that FSD had proved the employee’s possession of the information but not its appropriation by the companies, which denied knowing that he had it.
The Court’s Holding
The Court of Cassation held under Article 1240 of the Civil Code that appropriating confidential information belonging to a competitor and brought by a former employee constitutes unfair competition, even when the employee was not bound by a noncompetition clause.
The Court further held that the mere presence of a former employer’s confidential information on the employee’s professional computer constitutes appropriation of that information by the new employer. Because the Court of Appeal had found that confidential FSD documents were stored on the employee’s employer-provided laptop, it failed to draw the required legal consequences from its own findings.
The Court therefore partially quashed the judgment insofar as it rejected FSD’s economic-loss claim against GSIS, limited EPAI’s liability for that loss to €283, and ruled on costs and procedural-fee relief. It remanded those issues to the Bordeaux Court of Appeal, ordered EPAI and GSIS to pay costs, and jointly ordered them to pay FSD €3,000 under Article 700 of the Code of Civil Procedure.
Key Takeaways
- A new employer’s appropriation of a competitor’s confidential information through a former employee can constitute unfair competition under Article 1240 of the Civil Code.
- No noncompetition clause is required for this rule to apply.
- Confidential information stored on the employee’s professional computer is, by itself, treated as having been appropriated by the new employer.
Why It Matters
The ruling substantially raises the risk for employers that allow incoming employees to place a former employer’s confidential materials on company devices. A defendant cannot necessarily avoid unfair-competition liability merely by asserting that management did not know the employee possessed the information.
Companies hiring from competitors should use onboarding controls that prohibit the transfer of former-employer materials and promptly identify and remove confidential third-party information from corporate systems.