Many organizations frequently need to disclose and allow others to use their sensitive or proprietary non-public information or trade secrets, such as in the context of the purchase and sale of a business, partnering activities with other organizations, or engaging employees or contractors to perform services. Unauthorized use, disclosure or misuse of such valuable information may detrimentally impact an organization's competitive advantage or bottom-line.
A recent decision of the Ontario Superior Court of Justice in Sabre Inc. v. International Air Transport Association, 2011 ONSC 206 (CanLII) emphasizes that it is neither safe nor sufficient to assume that commercially valuable information shared in commercial dealings is automatically subject to a duty of confidence.
In this case Sabre sued IATA for breach of confidentiality for selling to the airline industry summarized ticket sales information which included data obtained by IATA from Sabre.
The Court found that although the information provided by Sabre may have been commercially valuable, it wasn't communicated in circumstances giving rise to a duty of confidence and therefore IATA wasn't subject to confidentiality obligations. While the decision was based on specific facts relating to the airline industry and as between the parties, it nevertheless reinforces the importance of obtaining written confidentiality agreements from those to whom confidential information is provided.
Here are additional recommended practices to ensure that confidential information is protected:
- Monitor, identify and document all confidential information and trade secrets.
- Employ appropriate physical and electronic security measures to limit access and protect confidential information (i.e. password protections; combination locks; firewalls; safety vault).
- Be pro-active in reviewing public disclosures by employees, including in promotional materials and external publications, to avoid inadvertent disclosure of trade secrets (i.e. patentable subject matter).
- Prior to disclosing trade secrets and confidential information to public or regulatory bodies, ensure familiarity with the legislative protections applicable to the disclosed information.
- Include clear and express confidentiality clauses in employment agreements and contractor agreements. These clauses should prohibit the unauthorized use or disclosure of confidential information, and require that such information be returned at the end of the employment or services relationship.
- Ensure third parties enter into strict confidentiality agreements to prevent unauthorized disclosure or use of confidential information, and monitor third parties for compliance.
- Disclose confidential information only to persons on a "need to know" basis.
- Securely destroy or dispose of documents and materials containing confidential information when they are no longer needed.
- React, respond and remedy breaches of confidentiality strictly and immediately.
- Establish procedures for periodic reviews of the optimal measures to protect trade secrets or confidential information.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
