Know-how

How BC law treats it

Know-how is not a registered intellectual property right, and BC has no trade secrets statute. Its protection comes from three sources: contract, such as confidentiality, employment and licence agreements; the equitable action for breach of confidence; and, in some relationships, fiduciary duties. Breach of confidence requires that the information had the necessary quality of confidence, was imparted in circumstances creating an obligation of 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 include injunctions, damages, an accounting of profits and, in some cases, a constructive trust. Courts choose the remedy that fits the relationship and the harm (Cadbury Schweppes Inc v FBI Foods Ltd, [1999] 1 SCR 142). Patents and other registered rights work differently. A patent requires public disclosure of how the invention works, so once a process is patented it is no longer secret; know-how covers what is kept confidential instead. Copyright protects the expression in a manual or code, not the underlying method, and trademarks protect brands, not knowledge. Protection is lost once the information becomes public, so businesses must actually treat it as confidential: limit access, mark documents, use written agreements and recover materials when people leave.

What it means for your business

For manufacturers, food and beverage producers, technology firms and service businesses, know-how is often the real competitive edge. It can be licensed, sold with a business, or contributed to a joint venture, but only if it has been kept confidential and documented. Buyers and investors will ask how know-how is protected. Weak confidentiality practices can destroy the value of years of development the moment a key employee or partner walks away. Example: A Delta food processor develops a proprietary cooking and packaging process. It keeps the process in a restricted manual, requires every employee and co-packer to sign confidentiality agreements, and later licenses the know-how to a manufacturer in another province for a royalty.

Risks and common mistakes

Assuming know-how can be registered or patented while staying secret. Sharing processes with suppliers, co-packers or potential buyers without a signed confidentiality agreement. Failing to document know-how, so it exists only in the heads of a few employees. Relying on copyright to protect a method rather than its written description. Allowing departing employees to leave with manuals, files or data without an exit process.