In Canada, trade secrets are generally considered to include information set out, contained or embodied in, but not limited to, a formula, pattern, plan, compilation, computer program, method, technique, process, product, device or mechanism; it may be information of any sort; an idea of a scientific nature, or of a literary nature, as long as they grant an economical advantage to the business and improve its value. Additionally, there must be some element of secrecy. Matters of public knowledge or of general knowledge in an industry cannot be the subject-matter of a trade secret.
Purpose
Trade secrets are a type of intellectual property that consists of certain information, expertise or knowhow that has been developed or acquired by firms. This knowledge frequently gives firms their competitive edge in the market and it has to be kept as a secret.
In Canada any information that a firm or its employees produces or acquires for the purpose of the firm's business can constitute confidential information that courts are willing to protect. All that is required is that the creator of the information “has used his brain and thus produced a result which can be produced by somebody who goes through the same process”.
According to Seager v. Copydex Ltd, courts will even act to protect a comparatively underdeveloped idea from misappropriation. However, information may stop being confidential and confident may be released from its obligations of confidence if the information subject to confidence is later publicly disclosed by the confider or a third party.
Trade Secrets vs. Confidential Information
With one exception in the field of employer-employee relations, there is no recognized distinction in Canada between the rights and remedies afforded to trade secrets as opposed to mere confidential information. In the field of employer-employee relationships, the British case Faccenda Chicken Ltd. v. Fowler, which has been cited with approval by several Canadian courts, has drawn a distinction between the two.
Allocation of powers under the Constitution
Under the Constitution Act 1867, the exclusive Legislative Authority of the Parliament of Canada extends to most areas of intellectual property such as patents, trademarks and copyrights; whereas the provincial government has exclusive authority to legislate on matters related to property and civil rights. The federal Parliament also has exclusive jurisdiction to create offences under its criminal law power.
At one time, the federal Trade-marks Act prohibited anyone from "do[ing] any other act or adopt[ing] any other business practice contrary to honest industrial or commercial usage in Canada," which was considered to include the taking of trade secrets. However, the Supreme Court of Canada ruled in MacDonald v. Vapor Canada Ltd. that the provisions encroached on the provinces' authority over property and civil rights and could not be upheld under the federal trade and commerce power. Therefore, the regulation of trade secrets as a civil matter falls under provincial jurisdiction.
Civil legal framework
Uniform Trade Secrets Act
The Uniform Trade Secrets Act, adopted by the Uniform Law Conference of Canada in 1989, would provide civil remedies for the breach of trade secrets. That Uniform Act defines "trade secrets" as follows:
To date, the Uniform Act has not been enacted into law by any of the Legislatures, but the definition has been incorporated in the federal Security of Information Act.
Civil Remedial Relief - Common Law Provinces
In all the provinces but Quebec, trade secrets are governed by the common law, ultimately derived from the English common law as interpreted and applied in Canada. The Canadian definition of trade secret is based on Canadian case law and doctrine, and also draws on American and English case law. In Lac Minerals Ltd. v. International Corona Resources Ltd., the Supreme Court of Canada held that a breach of confidence action is sui generis and the courts may rely on all three traditional jurisdictional bases for action (contract, equity and property) to enforce the policy of the law that confidences are to be respected.
In common law, there are essentially five types of civil action that a trade secret holder can rely on to seek protection of its trade secrets before a court of justice:
breach of contract (expressed or implied provision), breach of confidence, breach of fiduciary duty, unjust enrichment and wrongful interference with the contractual relations of others.