How can an employer
protect confidential
information?
Following last edition’s article about protecting intellectual property generally, Wright Hassall
associate Luke Moulton focuses on confidential information and its protection
more frequently
● the nature of the information
● whether the employer put the employee
on notice about the confidentiality of the
information
● whether the information can be easily
isolated from the other information the
employee may use.
Therefore, it can be difficult to say the
category into which relevant information
falls (categories are capitalised here
to refer to their strict legal meaning).
Generally speaking, based on case
law, Trade Secrets include, by way
of example, secret processes of
manufacture, a secret formula or special
methods for construction. Various
types of commercial information can
be Confidential Information, including
new – or improvements to – products or
processes, business methods, customer
lists and information, and financial
information.
PROTECTION
Although the employment contract
should be the main source of the rights
and obligations of an employee, the law
Often a business’ key assets
will be the information and
knowledge it possesses,
as well as the people who
develop and exploit those assets to
generate profit. Risks to such assets are
posed by an unscrupulous individual who
makes unauthorised disclosure or use
of the business’s commercially sensitive
information. Although it is impractical for
a company to keep that information and
knowledge under lock and key, a prudent
employer can take steps to minimise
the risk of its commercially sensitive
data being misused. This article explores
what confidential information is, how it is
protected and practical steps a prudent
employer can take to protect it.
In order to be protected by the law of
confidence, the information must not be
public knowledge, and any disclosure of the
information must be made in circumstances
that impose an obligation of confidence. For
example, the relationship between employer
and employee is a special one which has
an implied obligation of confidence.
The law has identified four categories of
information; they are described below.
Luke Moulton
The category which specific information
falls into determines the scope of
protection available to an employer in
respect of it. When determining the
category into which information falls, the
court would assess:
● the nature of the employment; certain
roles handle confidential information
TABLE 1: LEGAL CATEGORIES OF INFORMATION
Public information This cannot be protected
Skill and knowledge of employee This information belongs to an employee and, provided that it does not fall within one of the below categories,
can be freely used by an employee
Confidential Information Confidential information is protected during the course of employment but, after the employment has
terminated, it can only be protected if there is an enforceable express duty of confidence in the employment
contract.
Trade Secrets Trade secrets can be protected before and after an employment, even if there is no express duty of confidence
in the employment contract.
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