A recent decision of the Alberta Court of Queen’s Bench provides an interesting comment concerning claims for breach of confidence.
An employee of the plaintiff met with the defendant to discuss the idea of using a global positioning system (GPS) for seismic data acquisition. The parties signed a non-disclosure agreement during the meeting. The defendant developed and tested a system which used GPS for seismic data acquisition and filed a patent application relating to the system.
The plaintiff claimed, among other things, that the defendant breached the non-disclosure agreement and its duty of confidence by using confidential information obtained in the meeting to develop this seismic data acquisition system and subsequently presenting this system to the plaintiff’s competitors and seeking to patent it.
The non-disclosure agreement contained a definition of “confidential information” which was relatively restrictive in that it was limited to trade secrets and the like, which were not readily known and were subject to reasonable efforts to maintain the secrecy thereof.
In order to establish a breach of confidence, a plaintiff must show:
- the supply of information having a quality of confidence about it;
- the communication of the information in circumstances in which an obligation of confidence arose; and
- the unauthorized use of the information by the receiving party to the detriment of the owner of the information.
The Trial Judge emphasized that in considering a claim for breach of confidence the reasonable expectations of the parties in the particular commercial context are important. In this case, the parties were sophisticated and leaders in their respective fields of seismic acquisition and GPS equipment.
While the Trial Judge was satisfied the information was communicated in circumstances that imported an expectation of confidence, he was not convinced that the information was confidential. The nature of the discussions related to information which was well known in the industry and was in effect “public knowledge.”
In this regard, the Trial Judge considered the following factors to determine whether the information had a quality of confidence about it:
- the extent to which the information is known outside the owner’s business;
- the extent to which it is known by employees and others involved in the owner’s business;
- the extent of measures taken by the owner to guard the secrecy of the information;
- the value of the information;
- the amount of money or effort expended in developing the information; and
- the ease or difficulty with which the information could be properly acquired by independent effort.
None of these factors were particularly helpful to the plaintiff and, in addition, the Trial Judge found that the expectations of the parties were strongly influenced by the provisions of the non-disclosure agreement. Among other things, the plaintiff had not made any effort to maintain the secrecy of the information. Finally, the Trial Judge concluded that the information was not used to the detriment of the plaintiff.
The case illustrates that in situations involving confidential information, it is important to ensure that information regarded as confidential is treated appropriately. The information should be marked as being “Confidential” if in written form or otherwise clearly identified as being confidential