Trade secrets

How BC law treats it

No BC statute defines or protects trade secrets. The main civil claim is breach of confidence. Under Lac Minerals Ltd v International Corona Resources Ltd, the owner must show that the information had the necessary quality of confidence, that it was communicated in circumstances of confidence, and that it was misused to the owner's detriment. Contract adds protection through non-disclosure agreements and confidentiality terms in employment, contractor and licence agreements, and fiduciary duties bind directors, officers and senior employees. Remedies include interim and permanent injunctions to stop use or disclosure, damages, an accounting of the defendant's profits, and orders to return or destroy information. In Cadbury Schweppes Inc v FBI Foods Ltd, the Supreme Court of Canada confirmed that courts choose the remedy that fits the case, which may be compensation rather than an injunction. Since 2020, section 391 of the federal Criminal Code makes it an offence to knowingly obtain, communicate or make available a trade secret by deceit, falsehood or other fraudulent means. Protection depends on the business keeping the information secret. Ordinary employees owe a general duty of good faith and confidentiality, but restrictive covenants that go further must be reasonable. Employee non-competes are presumptively unenforceable and courts will not rewrite an overbroad one (Shafron v KRG Insurance Brokers (Western) Inc), so confidentiality and non-solicitation terms usually do more work.

What it means for your business

Many BC startups' most valuable assets, such as algorithms, customer data and supplier pricing, cannot be patented or are better kept secret. Once information becomes public, protection is lost. Businesses should mark and restrict access to confidential material, use written confidentiality terms with every employee, contractor and partner, and act quickly with an injunction application when a departing employee or partner takes information. Example: A senior engineer leaves a Vancouver software company and downloads its proprietary source code to a personal drive before joining a competitor. The company applies to the BC Supreme Court for an interim injunction and an order for return of the code, relying on breach of confidence and the engineer's confidentiality agreement.

Risks and common mistakes

Relying on a broad employee non-compete instead of clear confidentiality and non-solicitation clauses. Sharing confidential information with potential investors or partners without a signed non-disclosure agreement. Failing to limit access to sensitive files, which weakens the argument that the information was confidential. Waiting weeks after discovering misuse before seeking an injunction. Believing a BC or federal trade secrets statute provides a civil cause of action.