The earliest form of intellectual property was in the form of ‘trade secrets‘, reaching back to the silk making (‘Sericulture’) industry in 6th century China.
Confidential Information is distinguishable from other forms of IP as there is no recognised ‘property’.
A frequent question clients ask us when they have an idea or concept they want to share or pitch to someone is ‘How do I protect my idea?‘. The purpose for revealing an idea might be to seek seed funding for a start-up, explore the possibility of collaborating on a project to further develop a product, or discussing an idea for the creation of an app with a software developer.
You may not yet be at the stage of entering into a contract or agreement to formalise a working relationship, or to engage the services of the other party. However, you may need to share vital information that you don’t want to ‘risk’ by making an open disclosure.
Most people realise the importance of protecting their Intellectual Property. However, many don’t realise that ‘ideas’ and ‘concepts’ are not forms of Intellectual Property, as there is no ‘property’ capable of being protected under IP regimes such as copyright, registered designs and patents, (or even trade marks). Because of this, your focus needs to be on how to keep the information that comprises your ‘ideas’ and ‘concepts’ confidential.
While confidential information is not property as such, it is recognised in some common law jurisdictions, including Australia, as being protectable. The protection is through contract and equitable principles, and arises when you have a legally enforceable right to hold the recipient of your information to an obligation to keep the information confidential. As already noted, the ‘right’ to keep confidential information ‘confidential’ is not a ‘proprietary right’ (i.e. not property), but arises from the contractual undertaking, supported by the ‘fiduciary obligation’ that binds the other person’s ‘conscience’ to maintain the confidentiality.
A breach of confidence is an equitable action that may restrict the disclosure of information in certain circumstances, whereby the court will ‘restrain the publication of confidential information improperly or surreptitiously obtained or of information imparted in confidence which ought not to be divulged’ (see Commonwealth v Fairfax (1980)).
In other words, the focus is on the relationship between the parties, rather than the information itself.
Once it’s out there, you can’t claw it back!
Confidential information generally loses its value when it is able to be used by a third-party without compensation. In contrast to forms of IP which give you a monopoly right to exploit that property (which in turn creates value in the property), as the holder of confidential information you don’t have such an exclusive right. The value (or potential future value) in confidential information, for example in a trade secret, rests in the fact that you are keeping the information secret and you have taken reasonable steps to keep it secret.
The risk with confidential information is that the information may be inadvertently disclosed or leaked, so you need to ensure that you have a complete network of Non-Disclosure Agreements with everyone who may come into contact with the information. While confidentiality might form part of a contract (either expressly or by implication in the circumstances), if non-disclosure forms an explicit part of your agreement then the other parties will be bound by their obligations, and you may then seek equitable remedies – including a court injunction – to restrain the recipient from using or disclosing the confidential information.
How do you recognise confidential information?
Even if your idea or concept is relatively undeveloped, you can still attract an obligation of confidence, as long as the disclosure you make has the necessary quality of ‘confidence’ about it.
Your information will be capable of being identified as confidential where:
- The information is confidential in nature;
- You communicate the information in circumstances importing an obligation of confidence; and
- Unauthorised use of the information would cause you detriment.
It is important in your Non-Disclosure Agreements that you are able to identify:
- What comprises the confidential information, (i.e. you need a good definition of your confidential information);
- The purpose for which you are disclosing the confidential information; and
- The obligations being placed on the recipient of the information being disclosed.
So in summary – keep your mouth shut until you have a well-drafted Non-Disclosure Agreement in place!
For help protecting and exploiting your confidential information, call Andrew on 1300 654 590 or email us at firstname.lastname@example.org.