Trade Secrets basics - Australia

   Definition of a trade secret

AU Breach of Confidence Action (Equity)
To qualify for protection, the information must have the necessary quality of confidence and be received in circumstances importing an obligation of confidence. (Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73).

In Australia this has encompassed ‘trade secrets’ (ie commercially valuable information), personal information as well as government secrets.

Breach of Contract (Common Law)
This will  depend on the definition of confidential information contained in the contract between the parties. Only if the information falls within the scope of the definition and associated confidentiality provisions will the defendant be able to claim breach of the contract to protect the confidential information.

   Requirements to qualify for protection

AU Breach of Confidence Action (Equity)
The information must meet a four-limb test, as recently endorsed by the Full Court of the Federal Court in Optus v Telstra [2010] FCAFC 21 , namely that:

1. the information must be identified with specificity.

2. the information must have the necessary quality of confidence (ie not common or public knowledge).

3. the information must have been received by the defendant in such circumstances importing an obligation of confidence.

4. there must be an actual or threatened misuse of the information, without the plaintiff’s consent.

Breach of Contract (Common Law)
The defendant must establish that the use of the information by the plaintiff constituted a breach of the terms of the contract.

   Protection Mechanism

AU Breach of Confidence Action (Equity)
Arises from equitable principles, independent of contract. Protects against confidential information being misappropriated and causing detriment. 

Breach of Contract (Common Law)
Arises from common law principles. While confidentiality provisions do not necessarily exclude the operation of equity (see Optus v Telstra above), the court may choose to impose a contractual remedy over an equitable one in some circumstances – particularly where the remedy for breach of contract is seen to be adequate (see remedies below).

   Remedies

AU Breach of Confidence Action (Equity)
Injunctions, damages or account of profits can be awarded in accordance with general equitable principles. The Court can also impose other protective measures, such as the destruction or return of documents or other materials that contain or embody the confidential information/trade secret. (Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37)

Breach of Contract (Common Law)
The most common remedy for breach of contract is damages, but other equitable damages (ie injunctions or account of profits) may be ordered if damages would not put the parties in the same position as if the contract was performed.

   Confidentiality in Proceedings

Subject to the rules of the particular Court, parties can apply to the relevant Court for confidentiality orders to restrict access to documents filed in the proceeding. While hearings are generally public, subject to the rules of the particular Court, in certain circumstances the parties can also apply to the Court for parts of a hearing to be held in “closed court” sessions where confidential information is likely to be referred to, to seek to avoid disclosure to the public. Evidence filed or documents produced in proceedings are subject to an implied undertaking that they will only be used for the purpose of the proceedings in which they were disclosed (subject to limited exceptions) (Hearne v Street (2008) 235 CLR 125)