Confidential Information

Confidential Information

Every business thrives by keeping a variety of types of information secret: manufacturing processes, marketing strategies, contact lists and employee remuneration packages, to name a few. Collecting or generating information takes time, effort and money. The value of this investment can be significantly affected by deliberate or unexpected disclosure. This can happen, for example, when:

  • A company you have been negotiating with tries to use your information to compete with you;
  • A former employee divulges information to a new employer or attempts to use it for his own gain; or
  • Your information is in the hands of a government department and becomes subject to an official information request.

In each of these circumstances, a court’s view on the protection of your confidential information depends to a significant degree on the way you treat the information yourself.

Treatment of Confidential Information

To obtain an injunction preventing disclosure or to obtain an award for damages to compensate for the loss caused by improper disclosure of confidential information, it is crucial to be able to show that the information concerned has been consistently treated as confidential. In some cases, plaintiffs have been surprised to find that information they thought was obviously confidential, such as details of employee remuneration, could not be protected because they themselves had shared that information with a number of people.

To ensure that your valuable information stays secret, it assists to have appropriate contractual arrangements in place that require the maintenance of confidentiality and prohibit unauthorised disclosure. Where that involves entering into non-disclosure agreements or putting confidentiality clauses into a contract, it is important for you to consider with care the clauses that are appropriate in the particular circumstances. It also assists to have effective day to day information handling practices and to limit access to information of a confidential nature.

Fatal Mistakes

Marking a document ‘confidential’ does not make it so, but failing to mark it ‘confidential’ can be fatal. Why should a judge grant an injunction or damages to protect information belonging to someone who did not even go to the trouble of marking the documents? Of course, this does not mean that every piece of paper in the office should have a confidential stamp on it!

Overuse of this technique could undermine its value. What is necessary is a careful review of what information needs protection and then putting consistent practices in place for marking documents, keeping them in ‘confidential’ envelopes and circulating them only to those who need to see them.

Maintain Physical and Electronic Security

The following steps are helpful in maintaining security of confidential information:

  • Make sure employees use passwords to gain access to electronic systems, update their passwords regularly and prohibit employees from sharing their passwords.
  • Shred documents rather than leaving them in a bin where third parties could find them. Keep confidential documents locked in cabinets.
  • Ensure that computers can be locked and implement a policy that requires employees lock computers upon leaving their workstations.
  • Only transport confidential information that is appropriately marked and sealed.
  • Do not leave confidential information in a part of your office or workplace where customers or members of the public might walk past.
  • Monitor employee communications, but remind employees that their email communications will be subject to employer scrutiny. Wide scale dissemination of confidential information can be achieved intentionally or unintentionally at the click of a button.
  • If circumstances arise where it appears that information is going to be disclosed, remind others of their obligations.


The need to treat information as confidential continues throughout the process of generating, gathering, using and storing information. At the outset, get advice about whether to obtain relevant legal protections (eg to seek a patent), have appropriate contracts signed, store executed contracts carefully, and update them when circumstances change. In the course of using information, make sure it is marked and stored with care. Lastly, when you think others might use or disclose the information, remind them of their obligations.