In English law, a duty of confidentiality arises, without the need for any contract or registration process, where information with the necessary ‘quality of confidence' (that is, it is not as a whole publicly known or readily available) is received by someone in circumstances that impose an obligation to keep the information secret and not to use it for any unauthorised purpose.  The duty may arise out of the express or implied terms of a contract, or in other circumstances, such as where parties discuss a business proposal, or where secret information is obtained by reprehensible means.

If a person who is under a duty of confidentiality discloses the information to another person who is aware of its confidential nature, the other person is also bound. An employee owes his or her employer a duty of confidentiality as part of the implied terms of the contract of employment, and the duty extends not only to information specifically disclosed to the employee, but also to information which the employee obtains from third parties in the course of his or her employment.

The term ‘trade secrets' is used to describe certain types of confidential technical or business information (as opposed to purely personal confidences).  Trade secrets may comprise inventions (whether patentable or not), manufacturing processes, formulae, technical drawings or other ‘know-how' or data.  Confidentiality will therefore be relevant not only to unpatentable know-how but also to patentable inventions prior to publication.

There are certain exceptions to confidentiality - it will not apply where the information was already known to the recipient, or where it subsequently becomes public knowledge.  In the latter case, however, there is the qualification that a person cannot use confidential information as a "springboard" for his own activities, even if it subsequently becomes public knowledge.  There is also an exception of uncertain scope for disclosures in the public interest and possibly where a person receives confidential information in good faith without notice of its confidential nature.

In view of the uncertainties surrounding the duty of confidentiality it is generally advisable to ensure that all persons who have access to or generate confidential information are subject to express confidentiality provisions.  Practical steps should also be taken to safeguard the security of confidential information; although merely heading a document as ‘confidential' will not impose an obligation if it does not have the necessary quality of confidence.  Taking proper steps will in many cases give substantial protection for the results of creativity and innovation, and provide a basis for licensing or other means of exploitation.

© Davenport Lyons 2003.  All rights reserved

This document reflects the law and practice as at May 2003.  It is general in nature, and does not  purport in any way to be comprehensive  or a substitute for specialist legal advice in individual circumstances.