Breach of Confidence:

Question: What should I do if a former employee or contractor in Ontario misuses my confidential business information or trade secrets?

Answer: If someone you shared confidential information with later uses it without permission, you may have a breach of confidence claim, which generally requires showing the information was confidential, shared in confidence, and misused, as outlined by the Supreme Court of Canada in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574; Lynxs Paralegal provides Legal Services across Ontario to help you document confidentiality, preserve evidence, send a demand letter, and pursue remedies like injunctions and damages.   For fast, practical guidance to protect your business’s recipes, software, client lists, or processes, call (647) 249-6676 to book a confidential intake.

Misused Business Secrets

The success of a business may rely heavily upon secret recipes, proprietary software, unique systems, and customized processes; and accordingly, information relating to these key aspects may be highly valued with misuse of such confidential information quite harmful. In tort law, breach of confidence involves the wrongful use of information that was openly shared with the party that subsequently misuses the secretive information; and in this respect, breach of confidence differs from theft of trade secrets which would involve an element of misappropriation.

The Law

As per the case of Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, a Supreme Court decision, the elements that must be proven within a breach of confidence case are:

• The information conveyed was confidential;
• The information was communicated in confidence; and
• The information was misused by the party to whom it was communicated.

Specifically, per Lac Minerals Ltd., the Supreme Court said:

As a particularly interesting example case, Cadbury Schweppes Inc. v. FBI Foods Ltd., [1999] 1 S.C.R. 142 involved the licensing of the recipe for Clamato juice by Duffy-Mott (a company later acquired by Cadbury Schweppes Inc.) to Caesar Canning who then contracted production to FBI Foods Ltd.  After Cadbury Schweppes acquired Duffy-Mott, Caesar Canning was notified of termination of the licensing agreement; however, FBI, who later acquired assets of Caesar Canning, made use of the recipe despite a lack of authorization to do so.

Conclusion

Improper use of secretive information may constitute as the tort of breach of confidence where information was confidential, information was communicated within a confidential context, and the information was then misused by the party that received the communication.