White SW Computer Law
Intellectual Property, Information Technology & Telecommunications Lawyers
Melbourne Office - PO Box 452, COLLINS STREET WEST Victoria 8007 Australia
Sydney Office - GPO Box 2506, SYDNEY New South Wales 2001 Australia
Telephone: Melbourne Office - +61 3 9629 3709 Sydney Office - +61 2 9233 2600
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Email: wcl@computerlaw.com.au Internet: http://www.computerlaw.com.au

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Confidential Information Common Questions and Answers

What is Confidential Information?

An obligation to keep information confidential does not arise solely from the nature of the subject material but also from the method of disclosure.

What protection do I have?

Confidential information has similar protection as for other intellectual property rights such as copyright. It is protected regardless of whether you have a written contract or not.

You will ensure far greater protection by having a signed confidentiality agreement which can be customised to your particular circumstances.

If the confidential information is in the form of a literary work, eg a report or computer program, it may also have protection from the laws governing copyright.

The principles of obligations of confidence may not be protected in other counties. Some countries may have laws which prevent the creation of obligations of confidence.

This is an important consideration when entering into business negotiations in which confidential information is to be released.

Once an idea becomes public knowledge, it is difficult to control the use of the idea by other parties.

How do I know if something is Confidential Information?

It must be relatively secret. A common test for relative secrecy is when the information is available to the public and whether the public would have difficulty in acquiring the information except by unlawful means.

The information must be disclosed in circumstances which would indicate that it is to be treated as confidential, for example, marked commercial in confidence.

Inventors beware!!!

Before disclosing any confidential information to parties such as manufacturers, you should get acknowledgment in writing that you (the inventor) own all rights in the invention and that the information being disclosed is confidential and is to be used for the purpose of negotiations only.

There have been many cases where production of a very similar product has begun after negotiations with the inventor have ceased.

What can an employer do to protect Confidential Information which is used by employees?

Employees are bound not to disclose any confidential information they have access to unless permitted by their employer. However, it is easier to discourage such disclosures rather than recover from the damage caused from a disclosure.

Do you have a protection plan for your business including the following points?

  • Each employee should sign a written confidentiality agreement.
  • Regular reminders of employees' obligations in regards to confidential information should be included in newsletters and on the noticeboard.
  • Confidential documents should be marked as such and access to all confidential information should be limited only to those who need to know about it. A record should be kept as to who has had access to and who has created confidential information.
  • A reminder of employees' obligations should be given at the beginning of meetings which will involve the disclosure of confidential information such as information, for example a product launch or contract negotiations, and should be followed up with a memo or letter to each employee who was present.

What should be included in a Confidentiality Agreement?

A confidentiality agreement should be tailored to suit your particular circumstances, but the following issues amongst other things should be considered:

  • Is the confidential information clearly defined?
  • What are the restrictions on disclosure and if disclosure is permitted at all, to whom can the information be disclosed?
  • What are the restrictions on use, copying, storing and faxing the information and what security procedures need to be followed?
  • Is an indemnity required regarding the breach by any permitted disclosee and what is the discloser's liability in relation to the use of the information by the disclose?
  • In the case of an employer/employee, what breaches give rise to a right to terminate the employee's employment contract?
  • If an employee is terminated, what are the restrictions on the disclosure of information after termination?
  • Following termination of employment, meetings, negotiations and other occurrences of disclosure, what documentation and other media need to be returned

This article is a guide only and should not be used as a substitute for proper legal advice, readers should make their own enquires and seek appropriate legal advice.

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  Readers should make their own enquiries and seek appropriate legal advice.
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