Breach of Confidence:

Question: In Ontario, what do I need to prove to sue for misuse of business secrets as breach of confidence?

Answer: To sue for breach of confidence in Ontario, you generally need to prove (1) the information had the necessary quality of confidence, (2) it was communicated in circumstances importing an obligation of confidence, and (3) it was misused by the party who received it, as set out by the Supreme Court in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574.   This is different from theft of trade secrets because breach of confidence focuses on misuse of information shared in a confidential setting.   If you are dealing with misused recipes, proprietary software, or process data, Pollock Paralegal can assess your facts, help you gather the right evidence, and guide next steps without sending confidential details through the intake form, call (519) 694-0363 for a free 1/4-hour consult.

Misused Business Secrets

The success of a business may rely heavily upon secret recipes, proprietary software, unique systems, and customized processes; and accordingly, information relating to these key aspects may be highly valued with misuse of such confidential information quite harmful.  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.

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.