The unauthorized misuse and conversion of confidential and
proprietary information is an unfortunate reality for many
corporations. Companies spend significant resources in not only
developing confidential and proprietary information but also in
attempting to protect its confidentiality. Although injunctive
relief has become the principal remedy for breach of confidence, it
has primarily been confined to preventing the continued misuse of
confidential information and has not extended to returning any
goods alleged to have been copied using confidential and
proprietary information pending trial.
In the recent decision of Catalyst Canada Services v.
Catalyst Changers Inc., the Alberta Court of Queen's Bench
ordered the seizure of equipment alleged to be derived from
confidential information. The decision is the first reported
Alberta decision and is only the third reported decision in Canada
in a pretrial setting where courts have traced alleged confidential
information into physical items and ordered the delivery-up of such
alleged copies pending trial. Such an interim remedy is critical in
many instances to restrain defendants from converting, making use
of and profiting from such information to the detriment of the
The plaintiffs in that case were involved in the catalyst
removal industry and spent significant time and resources in
developing a product known as a rotary trailer that was and is used
to load and unload catalyst from oil and gas refineries. Certain
employees of the plaintiffs abruptly resigned and began working for
a new competing catalyst company. Prior to doing so, it was alleged
that the employees converted a substantial amount of confidential
and proprietary information belonging to the plaintiffs, including
the designs and specifications of the plaintiffs' rotary
trailers. Evidence was tendered that supported an allegation that
confidential and proprietary information was used to build two
rotary trailers that were materially identical to those built and
owned by the plaintiffs.
The plaintiffs were successful in obtaining an interim
injunction and Anton Piller order (civil search warrant) against
the defendants. As part of the injunction, the court ordered (among
other things) the delivery up of the defendants' two rotary
trailers. The defendants subsequently applied to vary the
injunction order to obtain the two rotary trailers back.
In dismissing the application to vary, Yamauchi J. confirmed
that the injunction order was properly issued in the first
instance, including the provision requiring the delivery-up of the
alleged copied equipment. The court found that there was a serious
issue to be tried regarding whether the plaintiffs' rotary
trailers were confidential and unique. In doing so, the court
confirmed the low threshold for what kinds of information are
capable of constituting confidential information. In particular,
the court confirmed that what makes something confidential is the
fact that "the maker has used his brain and thus produced a
result which can only be produced by somebody who goes through the
same process." Thus, the court rejected the argument that the
rotary trailers were somehow not confidential because their design
was not recorded by a blueprint or drawing but were instead
developed largely through trial and error.
The court also found that the combination of otherwise
non-confidential parts and elements of a product, and the method of
creating such an amalgam, could constitute confidential and
proprietary information. The court noted that it must look at the
whole of the circumstances to determine whether, in the
plaintiffs' mind, the rotary trailers and their design remained
confidential. Finally, in finding that the plaintiffs would suffer
irreparable harm if the injunction were varied, the court held that
a loss of customers including the potential loss of market
share are sufficient to constitute irreparable harm.
The decision in Catalyst Services marks a useful turning point
in the degree to which courts will go to protect confidential and
proprietary information and provides one more important and
necessary remedy in order to achieve what is often the only
practical way of protecting such 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.
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