Proprietary information is a compilation of materials and information regarding a business's products, services, operation, or other activities. It may also refer to or include trade secrets, which are valuable information and highly relevant to a business’s conduct of services or production of goods.
Some common examples are:
- client lists
- computer programs, systems, and passwords
- contracts (i.e., employment, business)
- financial information
- know-how
- marketing plans or strategies
- manufacturing data
- product research and development
- product designs or specifications
- production methods
There is no hard and fast rule on what constitutes proprietary information; this entirely depends on the judgment of a business or a company.
For material to be considered proprietary information, it must have been originally created or invented by the business or company. It must not be considered public information, such as what’s available to the state or the government.
What is the difference between proprietary and confidential information?
There is not much difference; proprietary information may also be considered as “confidential information” by a business.
These terms may differ from one other in this way: confidential information may be disclosed to third parties or shared with certain individuals, groups, or businesses. Proprietary information must be kept “confidential” internally and must not be shared publicly.
Here’s a short video to explain the difference:
What is considered proprietary information in Canada?
Proprietary information in Canada may also refer to trade secrets, one of the various types of intellectual property in Canada. However, unlike other intellectual properties with their own federal law like patents, industrial designs, copyright, and trademarks, there is no federal law in Canada that protects proprietary information or trade secrets.
There is also no legal process to register proprietary information or trade secrets before any regulating authority of the Canadian government.
Businesses or companies are still guided by Canada’s common law, provisions of the federal Criminal Code, contracts law, and Québec’s civil law on protecting their valued proprietary information or trade secrets.
For Québec’s civil law provisions governing trade secrets, you can consult an intellectual property lawyer in Québec.
Canadian proprietary information or trade secrets
What may be considered as proprietary information or trade secrets in Canada must at least:
- have commercial value because of it being a secret
- be secret or is only known to a limited number of people; and
- have been protected by the rightful owner (e.g., the business), by ensuring that it remains a secret
These guidelines are also based on World Intellectual Property Organization standards and are similar to the definition of a “trade secret” under Canada’s Criminal Code (Section 391, (5), Criminal Code)
Under these conditions, a business may decide what information is considered proprietary. In the same vein, it is also up to the business on what level of protection it needs and the type of protection that is appropriate for such information.
Protection of Canadian trade secrets
Common corporate practices show that trade secrets or proprietary information may be protected through any of these legal means:
- Non-Disclosure Agreements (NDAs) or Confidentiality Contracts: agreements between the employer and its employees, usually as part of employment contracts, stating that employees cannot disclose or publicize the employer’s trade secrets
- Non-Compete Agreements (NCAs): agreements between the employer and its employees, usually as part of employment contracts, which prevents the employees from working for a business-competitor for a few years after the employer-employee relationship has been terminated;
- Company Policies: implementation of internal measures that will protect the trade secret or proprietary information from being disclosed, such as installation of computer security systems, control of the accessibility of confidential documents, among others
A business may also sell or license the use of its trade secrets or any proprietary information to another business or entity when business opportunities weigh more heavily than on its continued protection or secrecy. Again, this is up to the business owner’s discretion.
Watch this video from the Canadian Intellectual Property Office on the step-by-step process of protecting trade secrets:
To learn more on how you can protect trade secrets, speak with an intellectual property lawyer in your province. If you live in Halifax, for example, contact an intellectual property lawyer in Nova Scotia.
Theft or Unauthorized Disclosure
When theft of a business’s trade secret or proprietary information happens, or when it has been disclosed without consent, authorization, or any legal right, certain civil and criminal actions may be filed against the violator. The cause of action available to the owner of the trade secret may depend on the source of the granted protection, which are usually the NDA, NCA, confidentiality contract, and the like.
Civil Action
Canadian common law outlines forms of civil action available to holder of a trade secret:
- breach of contract: when a person violates the provision of a contract, such as an NDA, confidentiality contract or clause, or NCA
- breach of confidence: when a person discloses confidential information to other persons, who are unauthorized to use or acquire that information, and whose use is detrimental to the owner of the trade secret
- breach of fiduciary duty: when a person fails to perform the fiduciary duty that was entrusted to them, such as the protection of a trade secret or proprietary information
- unjust enrichment: when a person, who illegally acquired a trade secret, makes a profit out of such trade secret.
Criminal Actions
Section 391 (1) and (2) of Canada’s Criminal Code also applies to the illegal or unauthorized disclosure of trade secrets or proprietary information by a person:
- who, by deceit, falsehood, or other fraudulent means, knowingly obtains a trade secret;
- who obtains a trade secret and then communicates it or makes it available; or
- who obtains a trade secret knowing that it was obtained through deceit, falsehood, or other fraudulent means.
Have any concerns regarding your business’s proprietary information? Ask us in the comment section below or contact any of the Lexpert-ranked leading Canadian intellectual property lawyers.