Is Confidential Information an Intellectual Property Right?

Technically there is no right created in the information itself. The rights afforded by the law in this area are primarily directed towards the right to keep such information secret. It follows that in most cases, protection ceases the moment the information is disclosed without any obligation to maintain its secrecy.

Another reason why this area of the law is not traditionally viewed as an IPR is due to the fact that the obligations imposed on the recipient of confidential information are often imposed by way of contract. Non disclosure agreements and confidentiality agreements are typical examples of how rights relating to confidential information can be imposed.

What about my employee's, they haven't signed any confidentiality agreements that I know of? Is my information still protectable?

Generally, yes. The duty of good faith and fidelity owed by the employee to the employer is a very onerous duty. It imposes the obligation to maintain confidentiality of the confidential information whilst they are an employee. Therefore, if you have confidential information, you can disclose it to your employees without fear of losing the ability to impose obligations of confidence on third parties or obtain patent or design protection for the novel invention or design.

What happens when my employee leaves my organisation?

The more worrying aspect of this area of the law arises when your employee leaves your organisation, having learnt confidential information. The question of what use, if any, can be made of that information is one which arises on a regular basis.

There are two ways in which such situations can be dealt with.

In some cases the doctrine of breach of confidence can be used in the post employment context as some aspects of the duty of good faith and fidelity owed by the employee to the you and your organisation persist beyond the termination of employment. In those cases, however, it is generally those acts of copying files and lists, or use of secret formulae or know how in which the courts are willing to intervene. However, in most cases the information sought to be restrained is information that through the general course of employment, has been etched into the memory of the employee in question, and its confidential nature is often questionable. In most of these situations the courts have been less willing offer assistance.

The second manner in which this situations can be dealt with is via inserting an appropriately worded clause into their employment contract, clearly setting out the permitted and prohibited activities, post employment. In every case, a court will balance your desire to protect your legitimate interests with public policy considerations, which protect your employee's right to earn a living in whatever lawful manner they choose. The courts have, in a significant number of cases, declined to uphold the restraint of trade on the basis that the restraint is unreasonable and void on public policy considerations. In light of recent decisions, it is important to use multiple clauses that progressively narrow the scope of the restraint and reduce the applicable time so that if a broader clause is held invalid, there are fall back clauses which would be more likely to be upheld by a court of law.

In either case it is very important to be mindful of the systems and processes in place surrounding the use of proprietary information within your organisation. The more your systems and processes clearly define the category of information and the restrictions on its use, the better chance you have of prosecuting a claim against a past employee for use of that information in the post employment situation.