Confidence and Confidentiality Part 1: Source of the Obligation

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Table of Contents

• The right to confidence
• Confidentiality and its relationship to other intellectual property rights
• Conclusion

‘Confidential Information’ – this term is commonly thrown around between business or industry partners, between employers and employees, in movies, TV shows, colloquially, and frequently during discussions pertaining to intellectual property. But what does it mean legally? How can you protect confidential information? What happens if confidential information is disclosed? When does obligations of confidentiality arise?

Over the coming weeks we will explore the topic of confidence and confidentiality. Our discussions will focus primarily on how the requirements of confidentiality can protect your intellectual property but some concepts also have broad commercial applicability (e.g. the execution of a confidentiality agreement or inclusion of a non-disclosure clause). This week we will briefly examine the history of the obligation of confidence.

The right to confidence

The source of law protecting confidential information can arise through contract or in equity (a subset of a court’s jurisdiction to consider and decide on outcomes). If an obligation of confidence arises in contract, it can arise through expressed or implied terms. The historical belief was that a contract covering matters of confidence would be able to deal with any subsequent breach. However, it has since been held that equity has the capacity to protect an issue dealt with by contract, including issues of confidence. In any event, if you are disclosing or intending to disclose confidential information, you should consider executing a confidentiality agreement between you and the parties to which you’re disclosing such information.

Unlike property rights, including intellectual property rights such as trade marks and patents, rights to confidence or confidential information is different because there is no actual property being protected. Therefore, when the courts are considering an action regarding breach of confidence it is more in the interest of the rights between the parties rather than the rights to the information itself.

Confidentiality and its relationship to other intellectual property rights

Confidentiality can be crucial to supplement other intellectual property. One significant example is patents. Confidentiality can protect the invention that is the subject of a patent so that a) commercial discussions relating to the invention is not considered secret use; b) disclosures made about the invention to third parties will not be disclosed to the public and become prior art.

Confidentiality can also be an important alternative to patents – by keeping something confidential, you can apply it commercially as a trade secret (think KFC’s eleven secret herbs and spices, or the well guarded recipe of Coca Cola). Therefore, confidentiality is important also as an alternate form of protection over intellectual property.

Conclusion

Intellectual property can be a valuable commodity and should be protected. Executing a confidentiality agreement, or including a confidentiality clause in a relevant agreement can assist with this protection. Any agreements to keep certain disclosures confidential should also be in written form. However, obligations of confidentiality can apply not only to intellectual property but also to other business or commercially sensitive information. Our team of lawyers have extensive experience in this area and would be happy to assist. To speak with one of our intellectual property lawyers today, contact LegalVision on 1300 544 755.