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In today’s increasingly competitive marketplace, protecting confidential information is vital for manufacturers. Failure to properly secure and protect confidential information can lead to the loss of competitive advantage and loss of business. Therefore, manufacturers must understand the law of confidence, what it protects, the duties owed by employees and/or third parties, and the remedies available.
The law of confidence
So, what is confidential information? Rather unhelpfully, confidential information is information that is protected by the law of confidentiality. Of possibly greater help: the law of confidentiality is an equitable principle that has been developed by the courts as far back as the 1800s and subsequently refined - largely for the purposes of protecting against the misuse of commercially sensitive material.
What does the law of confidence protect?
Information not in the public domain is capable of protection – including both commercial information and personal information. The scope of protection is very wide and can include commercial information such as customer lists, details of contacts or information of customers, improvements to a product or process, discoveries and scientific theories, new inventions, secret formulas, business plans, and trade secrets.
When is information protected by the law of confidence?
For information to be protected by the law of confidence, the information:
- Must have the necessary quality of confidence – information that is described or labelled as “confidential” is a clear example of this.
- Must have been disclosed in circumstances imposing a duty of confidence – an obligation to keep information received confidential may be imposed by contract or implied, for example, because of a special relationship between the parties.
- Must have been used in an unauthorised way or must be subject to the threat of such unauthorised use.
Why is confidential information important to your business?
Knowledge is power. A secret industrial process known only to one manufacturer, for example, will obviously have commercial value as it is likely to give that manufacturer a competitive edge. It is logical, therefore, that manufacturers will want to protect confidential information as far as the law permits.
How can confidential information be protected?
A duty of confidence may be imposed expressly in a Non-Disclosure Agreement (NDA) during business negotiations, for example, or it can be implied, for example, in circumstances where the person receiving information should have realised that the information was confidential.
Other practical steps that a manufacturing business could take to protect its information include restricting access to information using passwords or encryptions, monitoring access, enhanced cybersecurity, and obtaining patents and trademarks to benefit from additional protections afforded to intellectual property.
What remedies are available if a breach is found?
Where a breach of confidence claim is established, the types of remedies can include:
- Interim injunction/springboard injunction;
- Final injunction;
- Account of profits;
- Damages.
The most appropriate remedy will depend entirely on the circumstances. Injunctions are usually the most effective when there is a risk that information has been received or taken in order to gain an unfair advantage over the owner of the information. The courts have the power to grant emergency interim injunctions if there is enough evidence to warrant that action.
How can we help?
If you have any more questions or would like more information regarding protecting confidential information, you can contact our Manufacturing Solicitors below.