Foundations of IP Strategy

What is Meant by Confidential Information and/or Trade Secrets?

Around the world, there are various definitions of what falls within the scope of protected confidential information/trade secrets. However, generally speaking, legal protection is available for certain types of information that have actual or potential economic value, are not readily discoverable and in respect of which reasonable steps have been taken to preserve their confidentiality.

Confidential Information

For example, in Canada, “confidential information” is a legal term defined as “some product of the human brain” that is not publicly known and has commercial value to a business.

Confidential information may include things such as customer lists, customer preferences, supplier lists, price lists, employee salary information, manufacturing instructions for products or processes and so forth.

Specifically, confidential information has been defined by the highest court in Canada as follows:

The information, to be confidential, must have the necessary quality of confidence about it, namely, it must not be something which is public property and public knowledge. On the other hand, it is perfectly possible to have a confidential document, be it a formula, a plan, a sketch, or something of that kind, which is the result of work done by the maker upon materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process.¹

The term “trade secrets” is used, in Canada, to represent more specialized or technical information that typically requires a higher level of secrecy (for example, secret recipes or new inventions) and is therefore afforded greater legal protection.

In other words, a number of jurisdictions around the world consider trade secrets as special forms of confidential information.

In contrast, in the United States, the term trade secrets applies to all forms of valuable, confidential commercial information such as customer lists and secret recipes. Also, the definition of trade secrets may vary from state to state. As a result, in order to achieve greater uniformity across the country, many US states have adopted the Uniform Trade Secrets Act, which defines the scope of protected subject matter as follows:

1. derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and
2. is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.²