Confidential Information:

One of the guiding cases that outline the test used for what constitutes confidential information is a decision of Megarry J, when he was a Judge of the Chancery Division of the UK High Court. In that case of Coco v A N Clark (Engineers) Limited [1969] RPC 41, Megarry stated the three limbs f the test as being:

• That information must be considered or viewed to reasonably have an air of confidentiality about it;
• That information must have been disclosed in a context of trust or confidence, such as an employer-employee relationship; and
• The unauthorized use of that information would cause some detriment to the person who disclosed it within the relationship of trust or confidence.

Information that is confidential will be the product of an extended period of development, of high value to you and your competitors, may be subject to safeguards that the owner of that information has in place to protect it, and may not be in the public arena. An obligation of confidence exists in several situations, including fiduciary relationships, employment, contract, and under the obligations of company officers and executives.

The outcome of applying the Coco v Clarke test naturally depends on the circumstances of each case and the kind of information that is claimed as confidential. Although there may be some broad groups of data that could easily be seen as confidential (such as secret formulas or recipes, for example) others could arguably not be confidential (such as matters that could already be within the public domain in the same form as the information that is claimed to be confidential). The law relating to confidential information is constantly growing.

It is important that you do not delay if and when you have been accused of improperly using confidential information. As indicated above, there is often scope for debate whether an accused person is in fact liable for a breach of confidential information. In our experience, many of the clauses that are drafted in employment and other contracts that aim to secure a party’s confidential information can be rather vague and sometimes the law may find that they are not enforceable (either in part of wholly). Be that as it may, various forms of relief are available to a person claiming that breach has occurred, and these can seriously impact on your rights and liabilities (see further below).

There are several ways in which you can secure your confidential information. Some of the following examples are steps you can take with the assistance of our IP team:

• Draft appropriate and enforceable Confidentiality Clauses;
• Draft appropriate and enforceable Restraint of Trade Clauses;
• Have proper policies and training in place for your employees and volunteers which instructs them in relation to the use of sensitive data;
• Regularly notify staff of updates to these policies;
• Remind employees and contractors leaving your firm of their obligations under the confidentiality provisions of their respective contracts;
• Identify and clearly mark your confidential information;
• Have mechanisms in place that restrict access to this information, both internally (within your business structure) and outside of your business structure (when dealing with externals); and
• Do not delay any action when you are on notice of a possible breach.

Navado Lawyers and Solicitors can assist you with each step of the above processes and operational systems.

A party that can establish on evidence that confidential information has been inappropriately dealt with can seek injunctive relief from a Court as well as damages and an account for profits made as fruit of the breach. It is not unusual for an employer to be able to summarily terminate an employee for breach of a confidentiality clause. Injunctive relief is an Order from Court that restrains the party in breach, from continuing in its breach, and to return the confidential information (if possible) to its rightful owner.