Breach of Confidence:

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

Answer: Start by gathering evidence that the information was confidential, shared in confidence, and then misused, then send a written demand to stop use, preserve data, and return all materials, and consider urgent steps such as an injunction and a civil claim for breach of confidence as set out in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574.  PKM Legal Services provides paralegal services for Ontario businesses, helping you document confidentiality, prepare demand letters, and navigate Small Claims Court or related civil processes to reduce harm and protect your business secrets.

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

Per the Supreme Court in the case of Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, the elements requiring proof so to constitute 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.