Breach of Confidence:

Question:In Ontario, what proves a breach of confidence when someone misuses my recipe, software, or proprietary business process?

Answer:In Ontario, a breach of confidence claim generally requires proving the information had the necessary quality of confidence, it was communicated in circumstances importing an obligation of confidence, and the recipient misused it to the detriment of the disclosing party, as summarized by the Supreme Court in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574.  A common red flag is unauthorized use after disclosure, such as using a licensed recipe without permission, as discussed in Cadbury Schweppes Inc. v. FBI Foods Ltd., [1999] 1 S.C.R. 142.  If you suspect misuse of confidential business information, Olson Craig Legal can help lawyers & paralegals assess evidence, preserve documents, and plan next steps to protect your trade value in Ontario, call (226) 886-2001 to book a consult.

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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. The field of tort law includes a cause of action, meaning right to bring a lawsuit, known as breach of confidence which relates to the improper use of information by a person or other business with whom the confidential information was previously shared. Interestingly, where breach of confidence involves information that was previously shared, the wrongfulness arises from improper use of the information rather than theft of the information.

Note: Please contact Olson Craig Legal by phone at: (226) 886-2001 to discuss any specific questions that you may have.

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.