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We are witness to the rise in the "information" or
"knowledge based" business. As companies and industries
have emerged based entirely on information and knowledge, the
legal community has increasingly been called upon to find ways
to protect that information. The courts in Canada have responded
by finding that information is "confidential in nature",
thus restricting the right to commercially exploit.
In Canada there is no law that specifically deals with confidential
business information. Rather, the law has evolved through
court decisions. Courts may view confidential information
as property. A property right in confidential business information
precludes others from unauthorized commercial use.
So what is meant by "confidential business information"?
There are many examples. These include customer lists, drawings,
financial information and marketing plans. In determining
whether business information is confidential in nature, the
courts have considered the following factors:
(a)
whether the information is generally known to other;
(b)
whether the information can be obtained independently;
(c)
whether any efforts were undertaken to keep the information
secret; and,
(d)
whether the information is in some rudimentary way
unique or novel.
There are obviously a number of business relationships wherein
confidential information is exchanged. One example is the
employment relationship. Employees will normally be precluded
from using confidential business information for their own
personal advantage. The question will be whether or not the
knowledge obtained is to be considered "confidential"
or "special
or peculiar" and thus subject to protection for the benefit
of the former employer.
The courts may also be prepared to consider that the relationship
is fiduciary in nature. Fiduciary relationships arise out
of specific circumstances and include where the employee is
in a position of importance and has been made privy to confidential
business information. By determining that the relationship
is fiduciary in nature, the courts have a broader spectrum
of remedies available to assist the aggrieved party.
To conclude, it is incumbent upon business people to take
reasonable steps to protect their confidential information.
In most circumstances, it behooves the business owner to ensure
that those with access to confidential information enter into
appropriate agreements to protect the interest of the business.
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