What is Confidential Information?

Confidential Information is broadly any information that is confidential in nature and disclosed in circumstances importing an obligation of confidence. It is commonly used to protect commercially sensitive information and material, which cannot be protected by intellectual property rights.

The law of confidential information in England and Wales is not governed by statute, rather it has evolved out of decisions of the courts.

General principle

In order to protect information in accordance with the law of confidential information, the information being disclosed must be:

• Confidential in nature i.e. having the “necessary quality of confidence”; and
• Communicated in circumstances importing an obligation of confidence.

For information to have the “necessary quality of confidence” it must not be something which is public property and public knowledge. One particular issue that can arise is where confidentiality is claimed over information that is pieced together from information that is already in the public domain. In that instance, even though the source of the confidential information is entirely information already in the public domain, if something new and confidential has been created from that information following the application of the skill and ingenuity of the human brain, it is possible that the information could be protected by the law of confidence.

How an obligation to keep information confidential arises

The three circumstances when a duty to keep information confidential arises are:

• When a contract is made between two or more parties;
• When the circumstances of the disclosure imply an obligation; and
• When there is a special relationship between the parties concerned.

In the event that there is an express contract between two parties to keep information confidential, there is no requirement for the information to have the “necessary quality of confidence” because the parties are free to agree contractual terms between themselves.

Difficulties can arise when assessing whether “the circumstances of the disclosure imply an obligation”. Information can be disclosed in a range of different circumstances and the recipient might not be fully aware at the time the information is being disclosed that they should treat it as confidential. The court will consider whether the reasonable person standing in the shoes of the recipient of the information would have realised that the information was being given to them in confidence.

There are a number of situations where there is a special relationship between the discloser and the recipient. The most obvious relationship is that of employer and employee, however, it should be noted that only certain categories of information disclosed by an employer to an employee are capable of being protected by confidentiality, not any information the employer discloses to the employee.

Duration of protection

There is no time limit on the protection of confidential information. The only requirement is that it retains its confidential nature. If the information becomes public knowledge the party under the obligation to keep the information confidential is likely to be released from the obligation.

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