Many businesses are founded on important information or knowledge that forms the most valuable asset of the business. Such information can be a list of business contacts or customers or a secret recipe, such as Coca-Cola’s Coke recipe or KFC’s fried chicken batter, which are considered ‘trade secrets’.
Confidentiality can apply to all aspects of private and public life, from the protection of personal data; the use of CCTV; obligations and rights in employment law and the terms and conditions of contracts. For businesses, it is good practice to consider the matter at the outset, before even entering into negotiations with a potential business partner, contact or employee.
Generally, most businesses seek to protect commercially sensitive information by registering intellectual property rights, such as patents and trademarks. Contracts and non-disclosure agreements are also used for specific confidential matters. If these options are not available, under English common law, there are general principles that protect confidential information.
It is a widely accepted principle of law that a person who has received information in confidence cannot take unfair advantage of it. The recipient must not make use of the information to the prejudice of the person who gave them that information, without obtaining his consent.
To be protected by the law of confidential information, information must be:
(a) ‘Confidential in nature’, meaning that it must have the “necessary quality of confidence”.
(b) ‘Disclosed in circumstances importing an obligation of confidence.’
Employment and Confidential Information
Many confidentiality claims result from employment related matters. Case law in this area has identified four kinds of business information, set out below. The category into which a particular piece of information falls will govern the extent to which its owner can protect it and the remedies available in the event of its unauthorised disclosure.
- Trade secrets – valuable information that is treated as confidential and that gives the relevant party a competitive advantage. These can be protected both during and after employment, even if there is not an express covenant.
- Confidential information – this is information not as valuable to be considered a trade secret but still important to a business. Under employment law, employees must not use or disclose this while their employment continues. Depending on the terms of an employment contract, this type of information can be protected for a reasonable period after employment.
- Information that forms the skill and knowledge of the employee – this type of information belongs to the employee and can be used as the employee wishes, because it is generally person-specific; and,
- Public information – this is generally information in the public domain. It is widely accepted that this cannot be protected.
As is clear from the above, there are a wide range of matters that should be considered when looking at the issue of confidentiality – the solution is very much dependent on the context. If you have any queries in respect of protecting confidentiality or making use of potentially confidential information, contact LF Legal for further advice on 0203 146 3549 / [email protected]