The law of confidential information grants one of the broadest forms of protection of material in the suite of rights related to intellectual property. A duty to maintain information as confidential arises automatically by operation of law where the circumstances of the passing of the information regardless of form may be reasonably expected. It may also arise by agreement, such as where non-disclosure has been agreed by two or more people, such as non-disclosure agreements with consultants, employees or trading partners.

This right to require a third party to keep information confidential often offers broader protection than other forms of intellectual property rights as it is a right that disregards the form of the information. The key questions are whether the limited number of people are aware of the information, and whether the person receiving the information ought reasonably suppose that the information should remain secret. The rights of employees to apply their skills and experience gained during the course of their employment is a significant exception to the restriction to use confidential information. This exception however does not extend to processes or products that are the trade secret of a company.

The use of confidential information is something that should be incorporated in employment contracts to avoid the problem for small business where employees leave and establish competing businesses. These restrictive covenants may not be perpetual. Such a restriction would amount to an unlawful restraint of trade and not be enforceable. The protections gained by restrictive covenants however may be reasonable. The meaning of reasonable, in the context of the length of time that an employee may not work in a particular industry or geographical location, are determined by the circumstances of the parties when the employment contract was signed. Without these rights, employers expose themselves to unnecessary risks that may be protected by the law.

Our Experience

As intellectual property solicitors, we frequently deal with matters that involve an aspect of confidential information. We have advised our clients on the application of trade secrets, recovering sensitive company information, the methods and algorithms incorporated in computer software, and other restricted and classified material - information which is a stock in trade that must remain confidential in order to compete.