The British Columbia decision Equustek Solutions Inc. v Jack1 highlights the difficult, time consuming, and expensive exercise that organizations may find themselves in when an employee misuses confidential information. In today's environment, information can be downloaded, transferred or shared instantly. How can organizations best protect their intellectual property assets and confidential information to maintain their competitive advantage?
Intellectual Property and Confidential Information
Intellectual property and confidential information are related concepts. The World Intellectual Property Office defines intellectual property as "creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce."2
Confidential information, in comparison, includes any non-public information or material that is communicated or shared from a disclosing party to a recipient. The exact definition of confidential information may further be defined under an agreement between parties. What defines confidential information is the manner in which it is shared, rather than its particular features.
A disclosing party may have certain intellectual property rights in the embodiment of the confidential information or in the information found within it. Correspondingly, confidential information can be understood as a form of intellectual property.
In Canada, organizations can protect their intellectual property with statutory legal frameworks, such as the Patent Act3 , the Copyright Act4 or the Trademarks Act5 . However, protecting intellectual property can be an expensive exercise and it is impracticable to protect all confidential information using these means.
Correspondingly, in the context of employees, organizations usually rely on employment contracts to provide wide protection over their confidential information. The courts have given wide scope to the definition of confidential business information and an organization can claim ownership over many varieties of information including trade secrets, formulae, client lists and even internal office memoranda6 . The core requirement of confidential business information is that the creator of the information must have used their brain and produced a result which can only be produced by somebody who goes through the same process7.
Enforcing Rights and Obligations: The Equustek Decision
Although organizations have a toolkit available to them to protect their intellectual property and confidential information, enforcing their rights to such property can prove challenging. The decision Equustek Solutions Inc. v Jack8 of the British Columbia Supreme Court highlights the long and expensive journey that an organization may have to embark on to protect its intellectual property and confidential information.
Notably, the Plaintiffs began their legal battle against some of the Defendants in 2011, close to ten years ago. In another related proceeding, the Plaintiffs had to litigate all the way to the Supreme Court of Canada to force Google to de-index certain Defendants' websites, which were being used to unlawfully offer and sell the Plaintiffs' intellectual property.9
This decision concerned allegations by Equustek and its directing mind Mr. Angus and his holding company, that former employees and related entities stole confidential material regarding a product to create and sell their own product and related technical documents10 .
The individual Defendants included Mr. Marsh, an engineer who marketed and sold the Plaintiffs' products, being protocol converters, and later sold his business to Mr. Jack; Mr. Crawford and Mr. Ingraham, engineers who worked for Mr. Angus for a period of time; Mr. Jack, the directing mind behind the corporate Defendants ("Datalink"); and Messrs. Cheifots, engineers that worked on building Datalink's own protocol converter. The Plaintiffs also sued the website designer, Mr. Bunker, who provided the corporate Defendants with a website that could not be searched in a search engine.
Mr. Jack, Datalink and the Cheifots did not participate in the proceeding.
The Court was asked to consider whether the Defendants conspired to steal confidential material, including source code, from the Plaintiffs' protocol converter and associated technical documents and used what they stole to create their own protocol converter and associated technical documents11 .
1 2020 BCSC 793 [Equustek]
2 WIPO, What is Intellectual Property?, online: https://www.wipo.int/about-ip/en/
3 RSC 1985, c P-4.
4 RSC 1985, c C-42.
5 RSC 1985, T-13.
6 Coco v. A.N. Clark (Engineers) Ltd., (1969) RPC 41 at 47.
7 Saltman Engineering Co. Ltd. v Campbell Engineering Co. Ltd. (1948), 65 RPC 203 at 215.
8 Equustek, supra note 1.
9 Google Inc. v Equustek Solutions Inc., 2017 SCC 34.
10 Ibid at para 5.
11 Equustek, supra note 1 at para 5.
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