What information can be classified as confidential?

Jan 13, 2017 | Commercial Contracts

Have you ever wondered whether your business information is sufficiently ‘important’ to be classified as confidential? Do you think that you can only call information ‘confidential’ in nature if it relates to ‘trade secrets’, ‘know how’, ‘pricing information’, or other ‘semi-secret’ type information.

Well think again!

This is the test for determining if your business material is, or can be classified legitimately, as ‘confidential’.

Is it Confidential?

There is a relatively low bar to get over to be able to legitimately call your business information ‘confidential information’. Your potentially confidential information does not have to be a ‘trade secret’ for it to be classified as ‘confidential’.

The Confidentiality Test

This is the test, from the latest case law, to determine if your information can legally be classified as confidential is as follows:

Information is of a ‘confidential nature’ if it is:

  1. not ‘public property and public knowledge’; or
  2. if it is ‘constructed solely from materials in the public domain’, then "the skill and ingenuity of the human brain" has been applied to that document.

On that basis just because you source information from the public domain, e.g. from the internet (but ensure that you don’t copy someone else’s intellectual property) with the end result being that the information in the document is publicly available or common knowledge, this is no impediment to a document being legally ‘confidential’, provided it can be said that the maker has used “skill and ingenuity” in bringing the document into being.

Therefore, if you (or an employee) used ‘skill’ and ‘ingenuity’ to create your document then most likely it is confidential, even if the information in that document is publicly available or common knowledge!

Next Steps

You should consider protecting the disclosure of your confidential information by having recipients of that information sign a Confidentiality Agreement (or a Non Disclosure Agreement).

If you do use a Confidentiality Agreement you might want to consider stopping the recipient of your confidential information from copying the information and stopping the recipient from using the ideas and information disclosed.

Hot Tip

A contractual prohibition in a Confidentiality Agreement:

  1. against using and/or copying certain confidential documents is not the same as a
  2. restraint against using the ideas and information contained within the documents.

No 1 only stops someone using or copying your information. No 2 will stop the creation of future documents from ‘scratch’ that incorporate the same or similar ideas to those contained in the confidential documents.

Ideally your Confidentiality Agreement would include both 1 and 2.

For relatively simple documents Confidentiality Agreements can get very complex very quickly. Enjoy some peace of mind by letting us create one that perfectly fits your circumstances.

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