Confidential Information & Trade Secrets

“Confidential Information” generally means information which is not known to the public, or in the public domain, but is private to the company or individual who possesses that confidential information.

From a commercial perspective, confidential information can include details of a company’s financial affairs, business operations or customer engagements. A key type of confidential information could be a company’s trade secret, such as a method or technique of manufacture which gives the company an edge over other competitors.

A person who has access to confidential information is generally obliged under the law to keep the information confidential and cannot usually disclose the information to third parties. If he does disclose the information, he is said to have breached the obligations of confidentiality and is liable to legal action.

a) Protection of confidential information

There are no registration processes for confidential information, and neither is there a time limit within which the confidential information is protected.

In considering whether a breach of confidence is made out, the following will be considered:

  • Whether the information has the quality of confidentiality
  • Whether the information was imparted in circumstances importing an obligation of confidentiality. An obligation of confidentiality can be found even where confidential information has been accessed or acquired without the company’s knowledge or consent.
  • Whether the person who came into the information is able to demonstrate that his conscience was unaffected.  For instance that he was not aware that the information was confidential or he came across the information by accident.

b) How to safeguard confidential information: Some tips

Ensure that only certain categories of people (e.g. management) have access to confidential information.
Keep a clear record of all business transactions which may contain any confidential information. The information can also be marked "CONFIDENTIAL".
NDAs are "non-disclosure agreements", which can be used to ensure that a person is contractually required to keep the information confidential. Employees, consultants and vendors should sign NDAs.

c) Relationship between confidential information and other types of intellectual property

Diagram 1

Confidential Information which comprises of copyrighted material (e.g. instruction manuals, computer software, databases) will be protected by both the law of confidential information and copyright.

For example, a computer software developer can commercialise his software while still keeping the underlying software architecture, algorithm and source code confidential.

Diagram 2

As a general rule, it is not possible to maintain a patent and ensure non-disclosure of confidential information.

This is because, in return for obtaining a 20-year monopoly to exclude others from making, using or selling the invention, the owner of the invention will have to make full disclosure of the invention during the patent application process.

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