Breach of Confidence:

Question: I think someone misused my company’s confidential business recipe or process in Ontario; what should I do next?

Answer: If you believe confidential business information (like product recipes, proprietary software, or internal processes) was received in confidence and then misused without authorization, KLP Paralegal Services can help you assess a possible breach of confidence claim under the test in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574.  The usual next steps include preserving evidence (contracts, emails, version history, and NDAs), documenting how the information was disclosed, and identifying who used it and how it caused harm so your demand and remedies are grounded in the facts.  For a practical Ontario review with a paralegal, call (416) 570-6378.

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Misused Business Secrets

In business, the product recipes, proprietary software, systems and processes, among many other things, may be highly valuable and the misuse of such confidential information may result in considerable harm.  Generally, 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.