They can be plugged into a PC and used to copy data, often bypassing firewalls or password protection. Disaffected employees might therefore use such MP3s to download stacks of their employer's confidential information and intellectual property with a view to selling it to a rival organisation, joining a competitor or starting up their own business.
What protection does the law afford against such abuse of technology, and how can employers defend themselves? The starting point is to devise clear confidentiality, anti-competition and IT policies, and ensure that these are reflected in the wording of staff contracts. Use of storage devices and other media, such as CDs and floppy disks, on the employer's network should be closely controlled, or even prohibited if necessary, with strict guidelines on employees taking information away to work on home PCs.
If precisely drafted, restrictive contractual clauses can be enforced in the courts to clamp down on misuse of sensitive data and damaging competitive activity by current or former employees. That will be music to the ears of nervous managers.