Year in review: Trade secrets in Canada

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Year in review

With respect to civil matters, the past year has seen no progress on introducing legislation to protect trade secrets.

Although no further legislative progress was made, there have been decisions on various aspects of trade secrets law, with a particular focus on preliminary motions.

In Vaultose,⁵ the Ontario Superior Court of Justice provided clarification on contractual remedy provisions in agreements pertaining to, or containing, trade secrets. The applicant sought to enforce a contractual term in a confidentiality agreement that stipulated that breaches of the restrictive covenants of the agreement would entitle the applicant to injunctive relief.⁶ The Court declined to award the motion, noting that, although equitable remedies can be circumscribed in contract, and some conditions necessary for a preliminary injunction can be implied, the contract does not supplant the Court’s discretion in its consideration of equitable remedy.⁷

In SHAC Solutions,⁸ the Alberta Court of King’s Bench granted the applicant’s preliminary injunction, preventing former employees and shareholders (defendants) from operating a competing business. The defendants had taken confidential information to form their own company. The applicant manufactured chemicals through a unique process. The defendants argued that, although the process was previously patented, it had now become part of the public domain⁹ and the chemical process is not confidential because the information is publicly available online.¹⁰ The applicant was successful in arguing that the patent only disclosed the required materials for the process and that the ‘skill of watching the chemical reactions occurring and visually determining when to stop’ was a protected trade secret.¹¹ The Court also acknowledged that the publicly available information online did not cover the secret process.¹² It ultimately found that the defendants had breached their fiduciary duties and contractual obligations and granted the preliminary injunction.

In FLS Transportation Services,¹³ the British Columbia Supreme Court granted an Anton Piller order, authorising the search of the defendants’ business premises and the seizure of data on computer and phone devices. The applicant sought an ex parte hearing for the injunction. The applicant alleged the individual defendants were working together to orchestrate a mass departure to work for a competing business, and had transmitted confidential information to the competitor.¹⁴ The Court found there was a risk of evidence destruction and that all necessary requirements for the extraordinary remedy had been met.¹⁵