We all owe a duty of confidence in one way or another. The most common duty of confidence arises in one’s position as an employee. A duty of confidence can arise either by way of an express term in a contract, but can also be implied. To succeed in an action for breach of confidence, the discloser must prove that:
- An obligation of confidence in relation to the specific information existed;
- The information had the necessary quality of confidence;
- The use or disclosure was unauthorised; and
- The breach resulted in the discloser suffering damages (although damage is not always required).
What is Confidential Information?
One of the difficulties in successfully bringing an action for breach of confidence is identifying the information alleged to be confidential. The range of information confidence protects is very broad. Over time, three general categories of confidential information have been recognised by the law. These include:
- Personal information;
- Commercial information (sometimes referred to as trade secrets); and
- Government secrets.
What Sort of Commercial Information Can be Considered Confidential?
In a commercially orientated world, proceedings brought alleging a breach of confidence typically involves commercial information or trade secrets. Information that falls under this category includes:
- Business secrets;
- Customer lists;
- Formulae; and
A common example of a breach of confidence occurs when an employee establishes a rival business to their employer. In doing so, the employee gets hold of a confidential customer list from their current employer, without the employer’s knowledge or permission.
What Does the Court Look at When Determining Whether a Breach of Confidence has Occurred?
The courts won’t grant the disclosing party relief where they do not identify specific information. It is unrealistic to assert that all of the information received, or relating to a business transaction, or a commercial relationship is confidential. In short, you must be able to identify the confidential information specifically.
You should also consider whether the information is general ‘know-how’ as opposed to confidential information. An employer cannot restrict an employee from using ‘know-how’ obtained during their employment. Similarly, information that is regarded as ‘common knowledge’ or is in the public domain cannot be confidential information.
Some relevant factors to take into consideration when determining whether commercial information is confidential include:
- The extent to which the others outside the business know the information;
- The extent to which the employees and others in the business knew the information;
- The information’s value;
- The ease or difficulty with which others can acquire the information.
So What Can a Business do to Protect its Confidential Information?
A business can best protect its confidential information by including an express clause in their employment contracts, prohibiting the employee from disclosing.
It is then important to draft the employee’s employment contract, so it is clear what information the employer prohibits from disclosure, not just during the term of their employment but also when their employment ceases.
Some other everyday steps to protect confidential information include:
- Ensuring confidential documents are marked as confidential;
- Drafting a non-disclosure document between parties;
- Limiting disclosure of confidential information to those who need to know; and
Implementing systems to limit access to confidential information (for example, passwords or user access controls).
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