How to Defend a Breach of Confidence Claimteam
Information is one of the most valuable assets a company owns. Every business generates and uses information to make a profit. A piece of information is confidential if it is not known to the public but is crucial for a business’ operations and continued growth.
Confidential information includes financial records, client lists, supplier information, internal business processes and methods, blueprints, designs, and more.
A breach of confidence occurs when someone, usually an employee, misuses or reveals a business’ confidential information to its detriment. Companies routinely sue their employees for breach of confidence for disclosing their private information to outsiders.
If you have been asked to defend a breach of confidence lawsuit, you can respond to the claim by:
- Demonstrating the plaintiff failed to meet the litigation timelines;
- Refuting the plaintiff’s allegations;
- Proving the information had no commercial value;
- Demonstrating that the information was already in the public domain; or
- Proving the defendant disclosed the information in the public interest.
The article below will discuss each manner of defending the breach of confidence claim and explain how a commercial litigation lawyer can help in the whole process.
Demonstrate the Plaintiff Failed to Meet the Litigation Timelines
The Ontario Limitations Act, 2002 prescribes a two-year limitation period for filing corporate and commercial claims. The party bringing the claim must file it within two years from when the claim was discovered or reasonably should have been discovered.
If the aggrieved party files its breach of confidence claim too late, the defending party can ask the Court to dismiss the case for failure to file the lawsuit within the limitation period.
The claimant must then show they had a good reason for not filing the lawsuit within the prescribed limitation period. If they fail, the Court can dismiss their claim without hearing it on the merits.
Refute the Plaintiff’s Allegations
A typical corporate and commercial claim commences when a party files, issues, and serves a statement of claim. The statement of claim sets out the facts, allegations and damages claimed by the party filing the lawsuit.
The defending party may respond to a breach of confidence lawsuit by countering the allegations raised in the statement of claim. The party bringing a breach of confidence claim must prove the following:
- The information conveyed was confidential in nature;
- The information was communicated to the defending party in confidence; and
- The information was misused by the party to whom it was conveyed.
The defending party can defend the breach of confidence claim by disproving any of the elements mentioned above. For instance, if the defending party can show the Court the information disclosed was not confidential or that the plaintiff did not communicate the information in confidence, the claim for breach of confidence may fail.
Further, the owner of the confidential information must take reasonable steps to maintain its secrecy. If they don’t, the information may not be considered confidential. The confidential information revealed with the consent of the information’s owner cannot be the basis of a breach of confidence lawsuit.
For example, a director who reveals the company’s business model in front of a large audience cannot claim the information is confidential.
Prove The Information Had No Commercial Value
In breach of confidence claims, the Courts calculate damages based on the losses the plaintiff suffered due to the unauthorized disclosure of information.
A plaintiff suffers no loss due to the disclosure of information that does not have a commercial value. Therefore, if the defending party demonstrates that the disclosed information had no commercial value, the plaintiff’s claim may fail.
Demonstrate the Information Was Already in the Public Domain
A company can only be successful in its claim for breach of confidence if the subject matter of the claim is original enough to be considered private. Information already available in the public domain is not considered confidential, subject to limited exceptions.
The defendant can defend against the allegations of breach of confidence by demonstrating the information was already in the public domain. However, one must be careful while raising this defence.
If the defending party uses confidential information to get a head start in a business, they can be held liable for breach of confidence even though the information was publicly available. This is known as the springboard principle.
Prove There was a Public Interest in Disclosing the Information
The defending party can defend the breach of confidence lawsuit by convincing the Court that legitimate public interest warrants disclosure of the information.
For example, a company that uses lead in its secret sauce recipe cannot sue its employee for breach of confidence for revealing such information. In this case, the public interest – protecting people from lead poisoning – justifies the disclosure.
How a Commercial Litigation Lawyer Can Help
While you may not need a commercial litigation lawyer to defend a breach of confidence claim, having one by your side during commercial litigation can be helpful.
Many companies employ a chief legal officer (CLO) or a general counsel to head their legal department. The CLO oversees the work of the company’s in-house legal team and reports to its chief executive officer.
The CLO’s job description includes advising the company’s board of directors and senior management on legal and regulatory compliance, legal issues related to hiring and termination of employees, drafting and reviewing employment contracts, dealing with human rights violations, handling employee accommodation requests, and assisting the company’s lawyer with ongoing litigation.
For this reason, you should consider hiring a commercial litigation lawyer early in the process to assist you in defending the breach of confidence claim.
A commercial litigation lawyer has unique expertise in pursuing and defending commercial litigation. The steps involved in a typical commercial lawsuit are:
- the exchange of pleadings
- mandatory mediation
- discovery process
- pre-trial conference, and
A commercial litigation lawyer can provide a wide range of legal services at each stage of the litigation, including but not limited to the following:
- Providing legal counsel after conducting an initial assessment of your case;
- Developing a legal strategy based on the facts and circumstances of your case;
- Responding to the demand letter sent by the plaintiff company’s lawyer and negotiating on your behalf;
- Drafting, filing, and serving a statement of defence in accordance with the Ontario Rules of Civil Procedure (Rules);
- Preparing you for Alternative Dispute Resolution processes such as mediation, arbitration, and advising regarding the settlement of the claim;
- Engaging in the discovery process by asking questions from the other side to extract relevant information;
- Participating in the pre-trial conference to resolve some outstanding issues or settle the case, if possible; and
- Appearing before the trial judge, raising legal arguments, and producing relevant evidence and witnesses.
In this way, a commercial litigation lawyer can provide you with the guidance you need to get the results you want.
Defending a breach of confidence claim is crucial as the Courts calculate damages based on the plaintiff’s losses. If the party filing the lawsuit proves you misused the information conveyed in confidence, you might be liable to pay hefty damages.
A simple consultation can give you an idea of what should be done and how the lawyer can help with your case moving forward. A commercial litigation lawyer can assist you in negotiating with the other side. They can help you navigate the litigation process using their knowledge of the law and legal procedures.
If you are defending a breach of confidence claim and want to know more about how to defend yourself, our team of experienced business lawyers at Achkar Law can help. Contact us by phone toll-free at +1 (800) 771-7882 or email us at [email protected], and we would be happy to assist.