Trade Secrets can cover almost any type of confidential information that may provide a competitive advantage, ranging from the recipe of your favourite fried chicken to the formulas used to create your favourite household cleaning supplies. Trade Secrets can be protected indefinitely provided that they are kept a secret.
Compared to other types of intellectual property, Trade Secrets are not subject to statutory protection in Canada. Instead Trade Secrets are often protected either through the common law or through contract. You may have seen a clause in a present or previous employment agreement outlining how confidential information is to be treated, or were asked to sign a non-disclosure agreement when starting a new job. These are both common ways that Trade Secrets and confidential information can be protected and enforced through contract, as an employer will then be able to take action against any misappropriation of confidential knowledge.
With regards to the misappropriation of Trade Secrets, the court in GasTOPS Ltd v Forsyth communicated that the onus is on the plaintiff to demonstrate that the information alleged to have been exploited was at all material times confidential.[1] In other words, it is the responsibility of the person bringing the action to show that the Trade Secret or confidential information that was misused was in fact confidential.
To determine whether misappropriated information has the quality of confidence needed for protection the courts have considered a variety of factors such as:
· The extent to which the information is known outside the business;
· Measures taken to guard the secrecy of the information;
· The value of the information to the holder of the secret and to its competitors,
· Whether the holder and taker of the secret treat the information as secret.[2]
With regards to the misuse of confidential information in employment-related cases, courts will also consider whether the employer possesses a Trade Secret, the employee knew it was a secret, the employee acquired the knowledge during their employment, and the employee used the knowledge improperly after being terminated.[3]
While confidentiality agreements or non-disclosure agreements are useful tools for protecting Trade Secrets, they do not guarantee Trade Secret protection. Courts may weigh a variety of factors in determining whether information is confidential in nature. With this in mind it is imperative that Trade Secret owners, in addition to these types of contracts, put in place other appropriate measures to safeguard their confidential information.
[1] GasTOPS Ltd v Forsyth, 2009 CanLII 66153 (ON SC) at para 124.
[2] Ibid.
[3] Ibid, at para 125.