On February 3, 2012, the Supreme Court of Canada provided guidance on the rights of third parties with respect to information that is the subject of a request under the Access to Information Act (Canada). The court also dealt with, and was divided with respect to, the issue of the standard of review of access decisions. The standard of review issue will be discussed in a subsequent post.
Merck Frosst Canada Ltd. v. Canada (Health) concerned the procedural rights and substantive protections afforded to persons who submit information to the government for regulatory purposes. In Merck Frosst's case, the information was submitted to Health Canada in connection with pharmaceutical drug approval submissions.
Information submitted to a government institution may be released to competitors (and others) under access to information requests unless a statutory exemption applies. Although the Merck Frosst case arose in the context of a regulatory approval, these issues also arise when organizations disclose information in connection with contracts with the federal Canadian government (and provincial and municipal governments under separate access to information legislation).
On the issue of procedural protections, the Supreme Court of Canada concluded that the right of a third party to receive notice that the third party's information may be disclosed in response to an access to information request is not absolute. However, a government institution must provide the third party with notice that the government proposes to release the third party's information unless there is no reason to believe that any of the exemptions from disclosure apply.
The Supreme Court's decision sets a high threshold for disclosure without notice. Therefore, a third party who is affected by the information request will have recourse to the procedural protections of the Access to Information Act except in situations where it is clear that no exemption could apply. As the majority of the Supreme Court stated, those responsible for administering the Access to Information Act "must take their duty not to disclose exempt third party information as seriously as their duty to disclose information that the Act requires to be disclosed."
Section 20 of the Access to Information Act provides a number of exemptions of which the following three were relevant in the proceeding.
- trade secrets of a third party;
- financial, commercial, scientific or technical information that is confidential information supplied to a government institution by a third party and is treated consistently in a confidential manner by the third party; and
- information the disclosure of which could reasonably be expected to result in material financial loss or gain to, or could reasonably be expected to prejudice the competitive position of, a third party.
The court held that the threshold for a third party establishing a trade secret was high. A trade secret is a plan, process, tool, mechanism or compound that meets the following criteria:
- the information is secret in the sense of being known only by the third party or a relatively small group of persons;
- the third party must demonstrate an intention to treat the information as secret;
- the information has or is capable of having an industrial or commercial application; and
- the third party must have an interest worthy of legal protection (such as an economic interest).
In order to qualify as confidential information for the purposes of the second exemption, the following three criteria must be met:
- the information must be financial, commercial, scientific or technical information;
- the third party must have consistently treated it in a confidential manner; and
- the information must have been supplied to a government institution by the third party.
Information will not be confidential if it is available from public sources. Furthermore, except in unusual cases, a compilation of public sources will not be confidential. Nor will information be confidential if it could be obtained by another party by observation or independent study. Finally, the information will not qualify if it is information that is compiled by the government institution unless it is based on confidential information supplied by the third party.
The third exemption involves assessing the harm of disclosure. The harm-based exemption will be available if there is "a reasonable expectation of probable harm". To establish a reasonable expectation of probable harm, the third party must demonstrate:
- the harm is more than merely possible;
- there is a direct link between the proposed disclosure and the apprehended harm; and
- the harm is of a type that would reasonably be expected to ensue from disclosure.
The court held that non-public information that would be reasonably be expected to give competitors an advantage in future transactions or in the development of competing products may meet this threshold. The court did not rule out the possibility that publicly available information might also meet this threshold if the manner of presentation was unique. However, in general, the information must be confidential or at least not publicly available.
For updates on anti-spam, privacy, records retention and e-commerce as related to data governance, visit FMC's Data Governance Law Blog ( www.datagovernancelaw.com).
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