By Alison Wong
Information is a crucial business asset. To cite a common example, the formula for the carbonated soft drink Coca-Cola™ is a well-guarded industry secret. This secrecy creates a monopoly over production and sale of the drink, which generates billions of dollars of revenue for Coca-Cola’s parent company each year. If the recipe for Coca-Cola™ became public knowledge, or fell into the hands of a competitor, the company would likely lose enormous sums of money because everyone would know how to make their own, identical version of the drink. In short, the commercial value of the information would be lost.
The Canadian Intellectual Property Office (CIPO) defines “trade secrets” as “any business information that has commercial value derived from its secrecy.” To qualify as a trade secret, the World Intellectual Property Office notes the following criteria, in that the information must be “commercially valuable because it is secret; be known only to a limited group of persons; and be subject to reasonable steps taken by the rightful holder of the information to keep it secret.” Encryption of valuable information and requiring business partners and employees of a company to sign non-disclosure or confidentiality agreements would constitute examples of “reasonable steps” to ensure secrecy of information.
Unlike patent and copyright which are protected by federal statutes, there is no equivalent statue in Canada for trade secrets. Instead, the law of trade secrets is governed by common law principles and is enforced through tort claims such as breach of confidence or breach of fiduciary duty. In deciding whether information is a trade secret and in determining compensation for misuse of a trade secret, CIPO notes that courts consider the following factors:
To learn more about trade secrets, please refer to the following sources: