Breach of Confidence:

Question: What does a business need to prove for a breach of confidence claim in Ontario when someone misuses confidential business information like a recipe or proprietary process?

Answer: ?

Answer: If you’re a business in Ontario trying to stop the misuse of confidential recipes, proprietary software, or other custom business processes, Byfield Legal Services can help you assess whether your facts fit a breach of confidence tort and what evidence to gather (confidential information, it was shared in confidence, and it was misused to your detriment).   The Supreme Court of Canada’s framework in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574, focuses on misuse rather than theft, and courts typically look for whether the information had the “necessary quality of confidence” and whether there was an obligation of confidence when it was shared.   Byfield Legal Services helps paralegal clients understand risks, map out next steps, and pursue practical relief without sharing confidential details through online forms; call (289) 927-7365 to book a consultation.

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.

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.