Trade Secrets & Confidential Information

2. Protection of Trade Secrets

How are these rights protected? In Canada a body of case law has evolved whereby these rights are protected by contracts (confidentiality agreements/non-disclosure agreements) and relationships of confidence rather than by a statutory regime. Protection of trade secrets depends on the broad principle of equity: he who has received information in confidence shall not take unfair advantage of it. A person who has obtained information in confidence is not allowed to use it as a spring-board for activities detrimental to the person who made the confidential communication. He must not make use of it to the prejudice of the one who gave it to him, without obtaining consent.

A cause of action in response to the unauthorized taking or use of a trade secret may be based on a breach of express/implied contractual term, breach of fiduciary duty, breach of confidence or unjust enrichment. The elements necessary to show a breach of confidence, will also assist in pursuing any other cause of action related to another party's unauthorized taking and/or use of a trade secret.

The elements necessary in a breach of confidence action:

1. the information must have a 'quality of confidence' about it;
2. the information must have been imparted in circumstances importing an obligation of confidence; and
3. there must be an unauthorized use of that information to the detriment of the party communicating it.