Intellectual property – Back to basics Part 2

9 October, 2014
This article has been reviewed and is up to date as of 23 August, 2017

Confidentiality

 

Businesses will typically invest significant time and money in developing valuable data/information (for example, marketing or sales information) and therefore there is a need to protect this information from being taken and exploited by third parties. This article gives a brief explanation of the law relating to confidential information and provides tips on how that information can be protected.

 

1. What is confidential? The ‘quality of confidence’

Merely labelling a document as confidential will not, in itself, mean that it can be protected. For material to be confidential it must have an intrinsic quality of confidence, which means that it must not be publicly available.

 

In some circumstances it can be obvious that information is confidential, for example, a formula or secret recipe, but confidentiality can be more difficult to establish if it contains or originates from material in the public domain (for example, a contact list). This type of information will only be confidential if some thought and effort has been put into its contents or arrangement, making it materially different to the (non-confidential) material it originates from.

 

2. Express duty of confidentiality

Where confidential information is disclosed to a third party the best way of ensuring that it can be protected is by including an express duty of confidentiality in the contract. This is common in contracts of employment, non-disclosure agreements and settlement agreements. If certain documents (or types of documents) are of concern then they can be expressly referred to so that there is no argument about whether they are to be covered by the terms of the agreement.

 

3. Implied duty of confidentiality

Even if there is not an express duty, a duty of confidence can arise out of the circumstances in which the material is disclosed or where there is a special relationship between the parties. The most common situation where this arises is part of an employee / employer relationship.

 

For a duty confidentiality to exist it is necessary to establish that the person receiving the information would reasonably believe that the information is confidential and they would reasonably be expected to treat it as such.

 

4. Consequences for breaching a duty of confidentiality

If a duty of confidentiality is breached, for example, by an employee keeping confidential documents after the termination of their employment then their employer can seek an order for the delivery up of this information and/or an order restraining its use. In addition, the employer could bring a claim for any loss suffered or an account of profits received as a result of the misuse of this information.

 

5. Confidentiality Top Tips: Points to note

Steps should be taken to ensure that individuals who are in receipt of confidential information know that it is confidential and should deal with it accordingly. In particular:

  1. A contract should be put in place which stipulates how this material should be dealt with.
  2. Commercially sensitive documents can be marked “Confidential” and disclosed on a need to know basis.
  3. The clever use of IT can restrict access to confidential documents and limit the ability for it to be downloaded or copied to multiple devices.
  4. Appropriate training should be given to staff to ensure that they know what they can / cannot do with your confidential information.