Confidential Infomation/Trade Secrets

What is a Confidential information

 

Confidential information also known as trade secret, is information (for example know-how, technical processes, prices, customer lists) which is not in the public domain, that has commercial value to the business.

 

Law of Confidential Information

 

Confidential information may be protected through the law of confidential information. The law on confidential information is concerned with preventing a person from divulging information which has been given to him in confidence and on the express or implicit understanding that the information should not be disclosed to others or otherwise used by him.

 

The law of confidential information may be used in addition to other intellectual property rights. For example, while copyright cannot protect an idea (only the expression of the idea), the idea or a business plan can be protected through the law of confidential information.

 

Protection

 

No registration procedures are necessary for protection of a trade secret. However, not all information can be considered a trade secret.  The court will consider the following when determining whether there has been a breach of confidence:

 

  • Confidential Information: the information must have the necessary quality of confidence about it. In general, the information must not already be available to the public at large.

 

  • Confidential Obligation: the information must have been imparted in circumstances importing an obligation of confidence. For avoidance of doubt, information should be clearly marked as “confidential” so that those receiving the information understand that they are under a duty to keep it confidential.

 

  • Unauthorised Use: there must be an unauthorised use of the information to the detriment of the party communicating it. For example, that the unauthorised use of the information resulted in financial damage to the business.

 

If you are a third party to whom confidential information has been wrongfully disclosed, you would not be liable for disclosing or using the information if you obtained the information in good faith and do not have notice of the confidentiality of the information. However, once you become aware of the unauthorised use of the confidential information, you can then become liable for breach of confidence if you persist in using the confidential information.

 

Protection of Confidential information

 

You may wish to protect your confidential information in the following ways:-

 

  • Clearly mark confidential information as “confidential” to avoid disputes as to whether information is confidential;

 

  • Where it is unavoidable to disclose confidential information to third parties, for example suppliers, investors, licensees or sub-contractors, it is advisable to put in place a Non-Disclosure Agreement, which the third party should sign before you disclose the agreement.

 

  • Where confidential information is disclosed during employment, employment contracts should address the use of such confidential information and consequences of unauthorized use.