“Confidential Business Information”
  From The Desk of: Douglas H. Hancock, B.A., LL.B.

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.