Confidentiality and the Business Protection Rule
WHAT IS CONFIDENTIAL INFORMATION?
Confidential information is information that is not in the public domain and is secret or relatively secret. The law relating to breach of confidence protects against unauthorised use and disclosure of confidential information. Interests may also be safeguarded by contractual provisions.
HOW DOES THIS AFFECT MY BUSINESS?
AMWAY’s Rules of Conduct, which set out the principal terms of the contract between AMWAY and its IBOs, deal comprehensively with the protection of company's intellectual property. The Rules define Amway's 'Confidential Information' to include:
…all information relating to the business, IBOs, products, customers or suppliers of Amway or its IBOs - including mailing lists and other lists of IBOs (and) all information relating to the identity of and relationship between Amway IBOs (1).
Section 3 of the Rules (2) requires IBOs to keep Amway's Confidential Information 'secret and confidential' and not use or attempt to use it directly or indirectly for their own advantage in a manner which may cause actual or potential loss to the company or to other IBOs. IBOs are also obliged to take reasonable precautions to maintain the integrity of the Confidential Information.
The provisions safeguard Amway's confidential data bases from unauthorised use and disclosure in terms of generally prohibiting IBOs from promoting non Amway businesses or services to all but personally sponsored IBOs (except in very limited circumstances) (3). These general provisions protect the Amway business in general as well as the relevant line of sponsorship.
THE BUSINESS PROTECTION RULE EXPLAINED.
The Business Protection Rule (4), another important provision, specifically protects the business from those who may seek to run an alternative multi-level marketing (MLM) venture using the confidential information of their Amway business.
In summary, the Business Protection Rule says that whilst IBOs may engage in an alternative MLM business they must do so on the clear understanding that:
- their alternative business is maintained totally separate from their Amway business, i.e. they may not, directly or indirectly, use their Amway contacts or other information for the purposes of the alternative MLM opportunity; and
- while they may continue to qualify for normal payment of monthly bonuses, volume rebates or commissions to which they may be entitled as a consequence of the sales volume which passes through their Amway business, they will not participate in higher awards, nor be invited to attend Leadership Seminars or any other invitational functions for which their business may otherwise be qualified.
The effect of the Business Protection Rule is that no IBO is able to sponsor any other IBO into an alternative MLM business regardless of whether the activity is conducted directly by the IBO or indirectly through a relative, other person or pseudonym.
Another relevant and important Rule (5) generally deems two IBOs who are married or living together as operating a single Amway business. In these circumstances, each partner is held accountable for the actions of the other in terms of the business and the Rules. This Rule maintains that if one partner resigns as an IBO and later takes advantage of their knowledge of Amway to promote and expand their other business, the company may take whatever action is necessary to protect the business up to and including terminating the remaining IBO.
The Rules of Conduct define the relationship between the company and IBOs, including the rights and responsibilities of each, safeguard Amway's Confidential Information against unauthorised use and protect your business from exploitation by others. You should read, become familiar and comply with the relevant provisions.
If in doubt, contact the Legal Department on (02) 9854 8100 or via email at email@example.com.
1. Australian Rule 1.1.5; NZ Rule 1.1.6
2. Australian Rule 3.24; NZ Rule 3.28
3. Australian Rule 3.21 and 3.22; NZ Rules 3.24 and 3.25
4. Australian Rule 3.19; NZ Rule 3.22
5. Australian Rule 3.23; NZ Rule 3.27