How to protect against the theft of confidential business information

Keeping your business information confidential is key to protecting your valuable trade secrets. It minimises the risk of your competition finding out about your keys to success. And it stops your sensitive data from getting out into the open and into the wrong hands. But how can you protect confidential information, and what can you do in the event of a breach?

First, what is confidential information?

Confidential information covers an array of different types of material. It is an umbrella term for information which:

1. Has the ‘necessary quality of confidence about it’. Meaning, the information has not already been in the public domain.
2. Has been communicated in circumstances ‘importing an obligation of confidence’. Meaning, it is clear from how the information was communicated that it was confidential in nature. For example, if it was subject to confidentiality clauses in a contract, was provided to an employee by an employer, or was clearly a trade secret or sensitive commercial information, and so on.

How to protect confidential information from theft?

You can protect confidential information from theft by using contracts. As a business owner, you should govern all relationships through contracts. This is an extremely important step.

Maybe you are a start-up with a brand-new idea that you don’t want your potential competitors to hear about. Or perhaps you’re an established business with an array of confidential know-how and trade secrets. Regardless, it is key to have strong contractual clauses in place with both internal and external relationships.

Internal relationships include employees, directors and shareholders. External relationships include consultants, manufacturers, and distributors.

Doing so makes it clear from the outset that the information is confidential in nature. The other party confirms it is aware of the confidential nature by acknowledging and signing the contract.

As such, it is important that you frequently review your existing contracts with third parties who can access any of your confidential information. Every commercial agreement should include a non-disclosure provision to protect concepts/ideas which are not yet in the public domain, and that cannot be protected by traditional intellectual property rights. If there is no pre-existing contractual relationship (e.g. if you are at the pre-contract stage with a new client or if you are in talks with a potential manufacturer/investor) then it is advised to have a stand-alone non-disclosure agreement in place so that any confidential information that you disclose at the pre-contract stage is protected.

Here are some further steps you can take to protect your business information from theft:

• Identify what information needs to be protected: Start by identifying the type of confidential business information that is most critical to your business, such as financial data, customer information, intellectual property and trade secrets.
• Limit access: Limit access to confidential business information only to those who need it to perform their jobs. Implement strong password policies, use multi-factor authentication, and regularly audit user access to ensure that only authorised personnel can access the information.
• Train your employees: Educate your employees on the importance of safeguarding confidential business information and provide them with clear guidelines on how to handle it. Regularly remind employees of the policies and procedures in place for information security.
• Monitor for breaches: Implement a monitoring system to detect potential security breaches and unauthorised access attempts. Respond promptly to any incidents and take steps to prevent future breaches.

Using Non-Disclosure Agreements (NDAs)

Sometimes, you may need to disclose your confidential business information to parties who are not already in a contract with you. For example, when you are speaking with potential investors, manufacturers, or suppliers.

We highly recommend that you do not assume that these discussions are confidential. We advise entering into a non-disclosure agreement with the other party so that you can be confident there are confidentiality clauses in place. This will stop them from using your ideas or sensitive business information against you, or sharing them with a competitor.

Whether you are an established business owner or a brand-new start-up, having a template non-disclosure agreement to hand can be valuable. Here at Briffa, we can produce a tailored non-disclosure agreement for your business. You can then use it again and again with third parties to give you peace of mind when having sensitive discussions.

What happens if somebody discloses my confidential information?

Unauthorised disclosure of confidential information, or using information beyond the purpose for which it was provided, can be enough to constitute a breach of confidence. In such an event, you may be entitled to make a legal claim.

If your confidential information has been disclosed by another party and you are unsure what to do next, please feel free to get in touch with one of our solicitors. We can talk you through the next steps on a case-by-case basis.

Get in touch

No matter what stage you are at with your business, protecting your confidential information is a vital step. It is, therefore, crucial that you have strong contractual terms in place with everyone who has access to it.

Our specialist data protection solicitors can carry out a review of your current contracts. We can also produce bespoke contracts for you to use going forward with third parties, depending on what stage you are at.

We would be happy to offer you an initial free consultation to discuss what works best for you and your business. Simply contact us at info@briffa.com or on 020 7096 2779.

This post was written by Charlotte Owens and Katie Moruzzi.