Protecting Confidential Information

In circumstances where someone will want to protect confidential information, the most appropriate way to do so would be to enter a written contract ensuring that any information subsequently disclosed is disclosed pursuant to an obligation to keep the information confidential.

Written Confidentiality agreement

In situations where a party wishes to disclose confidential information, it will usually prepare a confidentiality or non-disclosure agreement (commonly known as an NDA), with a view to it being signed by the intended recipient party prior to the disclosure of the confidential information.

Care must be taken in drafting the confidentiality agreement; the disclosing party will wish to make sure it is adequately protected whilst the recipient party will wish to make sure the obligations imposed upon it are not too onerous and restrictive. Frequently, the disclosing party will want to tightly word the definition of confidential information as well as the purpose for which the recipient is permitted to use the information.

Notwithstanding the fact that confidential information can be protected indefinitely, parties to a confidentiality agreement will ordinarily look to limit the duration of the agreement. It is often the case that the confidential information will remain valuable for only a short period of time, for example, in relation to an imminent business venture and therefore a realistic time frame should be incorporated in an agreement.

No written confidentiality agreement

In the event that a written confidentiality agreement is not entered into, it might be possible to protect confidential information by receiving verbal assurances from the receiving party. In order to adequately protect the information, much will turn on the exact assurances given by the receiving party. Problems can also arise in the event that the parties do not subsequently document the verbal assurances as it will end up being a case of whose version of events the court believes.

Parties can take other steps to protecting confidential information, including:

• Restricting access to confidential information by limiting disclosure to only individuals to whom it is absolutely necessary;
• Make sure both physical and electronic security is implemented to prevent any accidental disclosure;
• Stagger the disclosure of confidential information;
• Restrict access to areas where confidential information is being retained; and
• Do not disclose electronic copies of the confidential information, which can circulated widely, quickly.

This article is the second in our three part series on the law of confidential information. The first article covers “What is confidential information?” pand the third “Enforcement and remedies for misuse of confidential information”.