IsraelLaw
Foreign professionals working in Israel, founders of startups, and executives joining Israeli companies all encounter the same question: what information can you use after you change jobs, and what crosses the line? It runs in both directions: an employee trying to understand what they can and cannot use at their next job, and a company trying to stop a departing executive from walking out with client lists.
Israeli law has a clear framework for this, anchored in the Commercial Torts Law 5759-1999 (Chok HaAvlot HaMischariyot) and shaped by decades of Regional Labor Court and National Labor Court decisions. Understanding where the line falls is practical knowledge for anyone working in a competitive industry in Israel.
1. What Counts as a Trade Secret in Israel
Section 5 of the Commercial Torts Law 5759-1999 defines a trade secret as information in business, manufacturing, or professional matters that is not publicly known, that gives the holder an economic advantage over those who do not possess it, and that the holder takes reasonable steps to keep secret.
That three-part test (not public, commercially valuable because of secrecy, and actively protected) rules out a lot of what employees often assume is covered:
- General industry knowledge and skills: What a software engineer learns about system architecture, or what a salesperson learns about negotiation, is not a trade secret. It is general professional expertise that belongs to the employee.
- Publicly disclosed information: Once a product is on the market, or a process is described in a published patent, it is no longer secret. A company cannot claim trade secret protection for something a competitor could find by reading the relevant patent register.
- Information the employer did not protect: A customer list shared with all forty employees and discussed freely in client-facing meetings is unlikely to meet the "reasonable steps" test. Courts look at whether the employer actually treated the information as confidential, not just whether it later claims it was.
Information that typically does qualify: detailed customer databases with contact history and pricing terms, proprietary source code and algorithms, undisclosed financial projections, formulas not disclosed in patents, and internal market analyses based on non-public data.
Israeli courts look at what the employer actually did to protect the information. Marking documents "Confidential," restricting access to specific employees, including confidentiality clauses in employment contracts, and requiring visitors to sign NDAs all help establish the trade secret. A company that hands new employees an NDA but stores its customer database on a shared drive accessible to the whole building will have a harder time in court. Employers should audit access controls, not just contract clauses.
2. Confidentiality Duties During Employment
During employment, an employee's duty to protect confidential information comes from several sources at once. The explicit source is any confidentiality clause in the employment contract. The implicit source, which applies even without a written clause, is the duty of good faith and loyalty.
Section 39 of the Contracts Law (General Part) 5733-1973 requires parties to a contract to perform it in good faith. Israeli courts have consistently applied this to employment contracts, holding that an employee who copies the employer's customer database to a personal drive, shares pricing information with a competitor, or funnels business opportunities to a side venture is breaching the duty of good faith, regardless of what the contract says.
Senior employees carry a heavier duty. A CEO, VP Sales, or R&D director who has access to the most sensitive information is held to a stricter standard than a junior technician. Courts have found that senior employees can breach their duties even through conduct that might be acceptable for someone with limited access, such as encouraging clients to stay in touch for when they "move on."
The period between giving notice and leaving is a high-risk window. Downloading files, copying contacts, or emailing documents to a personal account during this time is easy to detect through system logs and is frequently cited in injunction applications as direct evidence of misappropriation. If you are moving to a new role, leave cleanly: return all company devices, delete company data from personal accounts, and document what you handed back. A brief written exchange with HR confirming the return of materials protects you later.
3. Obligations After You Leave
The confidentiality duty does not end with the last day of employment. Section 6 of the Commercial Torts Law 5759-1999 creates a cause of action against anyone who acquires, uses, or discloses a trade secret through improper means, including a breach of the duty of trust that existed during employment. Former employees can be sued under this provision.
A former employee who takes client contact details and uses them to solicit those clients at a new employer, or who hands a competitor the source code of the former employer's unreleased product, has committed a commercial tort. Not working there anymore is not a defense.
The key phrase is "improper means." Not everything a former employee knows is off-limits. The law distinguishes between:
- Specific confidential information: The actual customer database, the exact pricing formula, the unreleased product roadmap. This is protected even after employment ends, with no fixed expiry date.
- General professional memory: The fact that you know the company sells to pharmaceutical companies, or that margins in the sector run at around 30%, is not a protected trade secret — even if you learned it there. Courts call this the "general knowledge and experience" exception.
Israeli courts do not expect former employees to have amnesia. What they require is that you not actively use or disclose specific confidential information. If a client calls you at your new job because they want to work with you personally, accepting that business is different from sending them a list of all your former employer's clients with their contract renewal dates. The former is generally allowed; the latter is not. When in doubt, ask a lawyer before your first day at the new job rather than after an injunction lands in your inbox.
4. Non-Compete vs. Trade Secret Clauses
Employees and employers often confuse confidentiality clauses with non-compete clauses (samchei takharut). They protect different things and are treated very differently by Israeli courts.
A confidentiality clause restricts what you can do with specific information. Courts enforce these broadly, because they protect a concrete legitimate interest (the employer's actual trade secrets) without preventing the employee from earning a living in their field.
A non-compete clause restricts where you can work. Israeli courts scrutinize these far more strictly. The National Labor Court has established that a non-compete clause must be proportionate: limited in time, geography, and scope to what is genuinely necessary to protect a legitimate business interest. An overly broad non-compete, one that bars an employee from working in their profession for two years across all of Israel, is unlikely to be enforced.
The distinction is worth knowing before you sign anything. An employer who cannot enforce a broad non-compete can achieve the same effect through a confidentiality clause limited to the information that is genuinely at risk. An employee who signs a non-compete should understand it is not automatically enforceable just because it is signed.
Our separate guide to non-compete clauses in Israel covers the enforceability tests in detail.
Some Israeli employment contracts include a garden leave clause — a period where the employee remains on the payroll but does not work, typically to prevent immediate use of sensitive information at a competitor. Unlike a non-compete, this is easier to enforce because the employee is being paid. Courts are more willing to hold someone to a paid restriction than to an unpaid one. If you are negotiating an employment contract, garden leave is often less legally risky than a broad non-compete for both sides.
5. Employer Remedies: Injunctions and Damages
The Commercial Torts Law 5759-1999 gives Israeli courts several distinct enforcement tools for trade secret claims.
Temporary injunction: An employer who suspects active misappropriation can apply to the Regional Labor Court for a temporary injunction (צו מניעה זמני, tzav meni'a zmani) prohibiting the former employee from using or disclosing the information while the case proceeds. Courts can grant these on an urgent basis, sometimes within days, if the employer shows a real risk of harm and that the case is not obviously weak. This is often the most powerful tool because it can stop a competitor from launching a product based on stolen information before trial.
Permanent injunction: After a full hearing, the court can permanently bar the use or disclosure of specific information.
Damages: The employer can claim actual damages for loss caused by the misappropriation. Proving the exact financial loss from a trade secret breach is often difficult, so the law also provides for non-compensatory damages. Section 13 of the Commercial Torts Law allows a court to award up to NIS 100,000 per breach without proof of actual loss, at the court's discretion based on the circumstances.
Account of profits: If the former employee or a third party profited from the trade secret — for example, by using a stolen formula to manufacture and sell a product — the court can order them to hand over those profits instead of paying damages.
Criminal liability: Section 6 of the Commercial Torts Law also carries criminal penalties, though civil proceedings are far more common in practice. In cases involving substantial theft — particularly in the high-tech sector — the Israel Police and the State Attorney's Office have prosecuted commercial espionage under both the Commercial Torts Law and the Penal Law 5737-1977.
Trade secret cases in Israeli courts are won and lost on digital forensics. Employers who act quickly to preserve logs — email system records, VPN access logs, file transfer records, USB device histories — have a far stronger case than those who realise months later that data was taken. If you discover a suspected breach, do not wipe or rebuild the former employee's computer: call a lawyer and an IT forensics specialist on the same day. Courts have dismissed strong-seeming claims because the relevant logs were overwritten before they could be preserved.
6. Employee Defenses
Employees facing trade secret claims are not without defenses, and some are significant.
The information was not a trade secret: The most common defense is showing that the information was public, was shared too widely to be genuinely confidential, or that the employer took no real steps to protect it. A customer list that was printed and handed to every sales rep and visitor counts for less than one stored in a password-protected system and accessed only by named individuals.
Independent development: If the new employer developed the same information independently — through its own research, by hiring others, or from public sources — that is a complete defense. The former employee and new employer bear the burden of showing independence, but it is a real defense where the facts support it.
Whistle-blower disclosure: Israeli law protects employees who disclose information about a serious breach of law to the relevant authority. Disclosing a trade secret to the police or a regulator in connection with a crime is not actionable as trade secret misappropriation, even if the information was confidential.
Disproportionate injunction: Even where a trade secret exists, a court will weigh the harm to the employee (loss of livelihood, inability to practice their profession) against the harm to the employer. An injunction that effectively ends a former employee's career in their field may be refused or scoped down even if the underlying claim is valid.
7. Practical Steps for Employees and Employers
Whether you are about to join a new company, leave one, or manage staff with access to sensitive information, a few concrete steps are worth knowing.
For employees changing jobs:
- Before you start at the new employer, review what information you actually hold from the old one and where you got it. If you are unsure whether using something crosses the line, ask an employment lawyer before you use it.
- Do not bring physical or digital copies of the former employer's proprietary materials to the new job. Return everything — devices, access cards, files, paper records — and keep a written confirmation.
- Read your employment contract at the old company. If there is a confidentiality clause, know what it covers. If there is a non-compete, understand whether it is likely to be enforced.
- Do not solicit the former employer's clients using information that only exists because of your former employment. Reaching out to people you genuinely know personally is different from working through a proprietary CRM list.
For employers:
- Identify which of your information genuinely qualifies as a trade secret — not everything does. Focus your protective measures on that subset, because courts will look at whether the protection was targeted and real.
- Use tiered access. Not every employee needs access to every database. Limit access to genuinely sensitive information to those who need it, and log who accesses what.
- Include confidentiality clauses in employment contracts, but keep them specific. A clause that lists the categories of protected information is stronger than a clause that says "all information is confidential."
- On the exit, conduct a structured offboarding. Retrieve all devices, disable access on the last day, and document what was returned. If the departing employee had access to the most sensitive information, a forensic image of their devices before return can preserve evidence you may need later.
For senior or R&D employees, Israeli employers sometimes conduct a structured legal exit meeting rather than a routine HR exit interview. The employee is reminded, in writing and with their signature, which categories of information remain confidential after departure and what the potential consequences of breach are. This serves two purposes: it is admissible evidence that the employee was on notice, and it sometimes prompts the employee to ask questions that reveal plans (a new employer, a competing project) that the company can address before harm occurs. Employees can and should read this documentation carefully before signing.