27 May 2010
A person who receives valuable or sensitive secret information in confidence (“confidential information”) owes a duty known as “a duty of confidence” neither to disclose nor make use of that information for any purpose other than that for which the disclosure was made without the consent. Should the receiver of such information (“the confidante”) threaten to do so, the person who imparted it to him or her is entitled to an injunction to restrain such unauthorized use or disclosure.
The following are a few examples:
- Trade Secrets: formulae, recipes, production methods, source codes, test results and other information obtained by research or other work;
- Business Secrets: budgets, customer lists, marketing plans and other information the release of which would be advantageous to a competitor and injurious to the claimant;
- Personal Information: diaries, photographs, private information about public figures the disclosure of which could be profoundly embarrassing; and
- Professional Information: information supplied to a solicitor, accountant or other professional advisor in the course of his or her professional duties
Circumstances in which the Obligation arises
The confidante must receive the information in confidence. That means that he or she must be asked to treat the information as confidential or it must be obvious to him or her that the information is given in confidence. The best way to do that is to ask the confidante to sign a confidentiality agreement. That is not in itself enough. Precautions must be taken (and seen to be taken) to keep the information secret such as logging documents and disclosures, keeping materials under lock and key and extracting confidentiality agreements. Merely inserting a confidentiality clause into a contract of employment may not always be enough.
Duty of Fidelity
A duty of confidence is often confused with an employee’s duty of fidelity. The two duties are related because confidential information is often disclosed in the workplace but they are distinct. An employee must serve his or her employer faithfully for so long as he remains on the payroll. That means that he or she may not disclose any information about his work that might benefit a competitor. That does not mean that the information is confidential and the employee is usually free to use skills and knowledge that he or she gained with another employer.
Information remains confidential only so long as it is secret. If the person to whom the duty is owed publishes the information or otherwise puts it into the public domain by marketing a product made from a secret process that can easily be reverse engineered it ceases to be confidential. There are a number of other circumstances in which the obligation of confidence will end. For example, disclosure may be ordered or permitted by a court where it is adjudged to be in the public interest.
It is sometimes possible to keep a trade secret such as a recipe or a production process out of the public domain indefinitely. So long as the information remains secret the obligation of confidence continues.
Relations with Other Rights
New products and production processes may be patentable. Copyright or unregistered design right may subsist in new designs. Copyright certainly subsists in the code of a computer program. The structure of a database may be protected by copyright and its contents by database right. Access to, the integrity and use of personal data is protected by the Data Protection Act 1998. There is also an overlap with the developing law of privacy.
The law of confidence is to be found in the cases. A common starting point is Megarry J’s judgment in Coco v A N Clark (Engineers) Ltd.  RPC 41. The Court of Appeal set out the basic principles relating to employment in Faccenda Chickens Ltd. v Fowler Ch 117.
An action for breach of confidence relating to trade secrets must be brought in the Chancery Division of the High Court or a county court to attached to a Chancery District Registry. Other breach of confidence cases can be brought in the Queen’s Bench Division or other county courts. The same is true of Northern Ireland. In Scotland these cases are brought in the Outer House of the Court of Session.
Jane Lambert “All you need to know about Confidentiality” 14 June 2006