Confidentiality agreement

How BC law treats it

BC has no statute governing confidentiality agreements or trade secrets in civil law. An NDA is enforced under the ordinary law of contract. Separately, equity protects confidential information even without a contract: a claim for breach of confidence succeeds if the information was confidential, was communicated in confidence, and was misused to the detriment of the person who shared it (Lac Minerals Ltd v International Corona Resources Ltd, [1989] 2 SCR 574). Remedies for breach of confidence can include damages, an accounting of profits or an injunction (Cadbury Schweppes Inc v FBI Foods Ltd, [1999] 1 SCR 142). A well drafted NDA defines confidential information, states the permitted purpose, lists standard exclusions (information already public, already known, independently developed or lawfully received from a third party), sets the duration, requires return or destruction of materials, and states the remedies, often including consent to an injunction. Mutual NDAs protect both parties in a negotiation or joint project. Courts read NDAs more favourably than non-competition covenants. A confidentiality obligation that only protects information is usually enforceable, but an NDA drafted so broadly that it prevents an employee from working in their field may be treated as a disguised restrictive covenant and tested for reasonableness (Shafron v KRG Insurance Brokers (Western) Inc, 2009 SCC 6). Claims for breach must generally be started within two years after discovery under the Limitation Act, SBC 2012, c 13. The federal Criminal Code, RSC 1985, c C-46, s. 391 also makes it an offence to obtain or disclose a trade secret by deceit, falsehood or other fraudulent means.

What it means for your business

An NDA is often the first document signed in a sale, investment, partnership or software project, and it sets the rules for the most valuable information a business has. Without one, a business must rely on the harder equitable claim for breach of confidence. A clear NDA also helps show a court that information was treated as confidential, which supports an urgent injunction if a counterparty or former employee starts using it. Example: A Vancouver biotech startup shares its formulation data with a potential manufacturer under a mutual NDA. When the manufacturer later launches a similar product, the startup seeks an injunction based on both the NDA and breach of confidence.

Risks and common mistakes

Defining confidential information so vaguely that a court cannot tell what is protected. Leaving out a permitted purpose clause, so misuse is hard to prove. Using an NDA to impose what is really a non-competition restriction on an employee. Failing to mark or track confidential documents, which weakens the claim that they were confidential. Setting a short duration for information, such as trade secrets, that needs indefinite protection.