Trade Secrets & Confidential Information

1. What is a Trade Secret?

One of the most valuable forms of confidential business information is the "trade secret". It is important to know what kind of information qualifies as a trade secret, and what practical steps can be taken to protect your trade secrets (and other sensitive confidential business information). There is no legislation in Canada setting out a clear definition of what is a trade secret, unlike the legislation governing trade-marks, copyrights, patents or industrial designs. However, the Canadian case law supports the interpretation put forward by the Alberta Law Reform Commission in 1986 [Institute of Law Research and Reform, Report No. 46, July 1986, p. 256]. This definition of a trade secret states:

"Trade secret" means information including but not limited to a formula [recipes for beer, hot sauce, cookies, glue], pattern, device, compilation, programme, method, technique, or process, or information contained or embodied in a product, device or mechanism which:

i. is, or may be used in a business;
ii. is not generally known in that trade or business;
iii. has economic value from not being generally known;
iv. and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Thus, any formula, pattern, device, or compilation of information which is used in one's business and which gives one an opportunity to obtain an advantage over a competitor who does not know and use it is considered a trade secret.

Some trade secrets, such as manufacturing techniques and recipes or formulas for products might also be eligible for patent protection, but if the owner of the trade secret is unwilling to publicly disclose the manufacturing process or the means to make the product in a patent application, the only protection remaining is to keep the information secret and to never disclose the secret to anyone unless they also agree to keep the information a secret and execute confidentiality agreements (confidentiality agreements should be written to reflect the specific fact situation between the party who owns the confidential information and the party who is receiving disclosure of the confidential information but a standard confidentiality agreement would be available on request at a first interview).