Breach of Confidence:

Question: Can a business sue if someone misuses a confidential recipe, software, or process they were given in confidence?

Answer: If you shared a recipe, proprietary software, or unique process in confidence and the other party used it without authorization, a paralegal at Forseti Legal Services can help you assess a potential breach of confidence claim (a tort) by mapping the facts to the key elements from Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, and outlining next steps to protect your business interests.   Call (705) 806-7577 to discuss how courts look at whether the information had the necessary quality of confidence, was communicated in confidential circumstances, and was misused to your detriment, including situations involving licences of recipes or other proprietary know-how.

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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. In tort law, breach of confidence involves the wrongful use of information that was openly shared with the party that subsequently misuses the secretive information; and in this respect, breach of confidence differs from theft of trade secrets which would involve an element of misappropriation.

Note: Please contact Forseti Legal Services by phone at: (705) 806-7577 to discuss any specific questions that you may have.

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.