3 myths about confidential information
Uber has recently agreed to pay Waymo a settlement of $245 million in a trade secret dispute involving use of information concerning driverless car technology, unlawfully disclosed by an employee. While this only amounts to 0.34% of Ubers equity, exposure of commercially sensitive information can destroy a company. It can also result in unfair competition and the stifling of innovation, particularly in sectors that rely on technological advances. It is therefore important to understand the basics – and take a proactive approach when it comes to protecting your information… Here are some common misconceptions explained:
1. “NDAs are worthless”
For a company of any size, NDAs are the most important and basic tool for protecting corporate information and IP rights. They allow you to talk freely with third parties – investors, manufacturers, collaborators etc., without fear of them stealing your ideas/ disclosing important financial data. They act as a deterrent, provide an action for breach of contract and are relatively inexpensive.
NDAs are only “worthless” when they are poorly drafted. This can happen when they are considered standardised documents. As terms are often negotiated, NDAs can actually vary considerably. Yes, certain core provisions are essential, however, a well-drafted agreement has at least a handful of variables to ensure they are properly fit for purpose. Adaptations for specific uses are crucial to ensuring that the information you intend to protect is properly identified.
2. “The law is black and white”
There is no single piece of UK legislation governing the rules of confidentiality. Instead, we have the ‘duty of confidence’, developed through 200 years’ worth of case law. This broad principle generally requires a “necessary quality of confidence” and an “obligation of confidence” before a disclosure can be an actionable offence – with the exception of lawful disclosures, i.e. it was consented, in the public interest or there was a legal duty to disclose.
It is an equitable doctrine which attempts to maintain fairness when strict legal analysis may cause injustice. However, this flexibility creates a discretionary gloss – meaning the outcomes of disputes are less predictable. Marking all commercially sensitive documents as confidential; only disclosing them to select people and including express confidentiality clauses in employee and commercial contracts are all steps you can take to improve your protection.
3. “Confidential information is not intellectual property”
Confidential information can actually be the most valuable form of intellectual property. While patent registrations are expensive, take a long time to process and offer 20 years protection at most, trade secrets can maintain a monopoly for an infinite number of years. Think Coca Cola – the company classified the formula top secret, actively took steps to protect it and has now had a competitive advantage for well over 100 years.
While keeping confidential information secret is a pretty obvious one, it is worth having a think about what you can do to protect it, just as you would for your other IP. Luckily, intellectual property is the area of Briffa’s market leading expertise. Our lawyers have a wealth of expertise protecting valuable trade and business information at both local and international levels. If you would like help reviewing or drafting a NDAs or other commercial agreement – or just some general advice on your internal procedures, contact Briffa for a confidential consultation.