confidentiality and private secrets

This page considers protection for personal and commercial information under common law, contract law and other confidentiality law.

It covers -

• introduction
• concepts
• equity
• contract
• other law
• studies

It is complemented by discussion elsewhere on this site regarding intellectual property and privacy, along with a more detailed note on particular confidentiality cases.

     introduction

Australian and other societies are founded on expectations that information can be imparted 'in confidence' to personal and business contacts (including colleagues, subordinates, lawyers, government officials and health service providers) without unauthorised disclosure.

That provision of information might involve intimate matters, for example regarding an individual's health or the health of a person for which that individual is responsible. It might involve legal representation, participation in a census or banking and insurance activity.

It might instead involve the protection of what is often refererred to as 'trade secrets', 'know how' or merely 'commercial confidentiality'. That protection can serve as a surrogate for intellectual property protection such as copyright and patents, with a businss for example avoiding the disclosure (and finite period of protection) associated with registration of a patent. It can provide protection for culturally sensitive information provided by indigenous communities to anthropologists and curators.

More broadly it embodies notions of trust and obligations on a personal and corporate basis.

Confidentiality does not provide an ethical or legal obligation to keep any and all information secret in every circumstance. Instead it centres on a duty to use particular information - typically identified through some form of notification or through the nature of the context in which it is imparted - only for the purposes for which it was provided.

Justice will on occasion override that duty, for example to preserve the life of a medical patient or the patient's associates (as noted later in this guide), for national defence or law enforcement. There is thus no absolute right of confidentiality in information imparted by criminals to each other for breaches of law.

Other pages in this guide consider official secrecy and the extent of protection for particular relationships - eg between doctors and patients, lawyers and clients, clergy and penitents - and people engaging in whistleblowing (ie unauthorised disclosure in the public interest). The following paragraphs explore protection of trade secrets, know-how and other business information under common law and contract law, with brief reference to some other law.

It is important to emphasise that confidentiality is not narrowly restricted to commercial entities or particular classes of information. The incidents highlighted in the supplementary note on confidentiality cases demonstrate that law has been used to protect a broad range of information, including unpublished artistic works (Prince Albert v Strange), genetic research (Franklin v Giddens), cultural sensitive material regarding Indigenous ceremonial (Foster and Others v Mountford and Rigby) and a television program scenario (Talbot v General Television Corporation).

     concepts

As the preceding paragraphs indicate, the term 'confidentiality' is often used loosely. Recognition of confidentiality in statute law and courts varies from jurisdiction to jurisdiction.

In considering protection for concepts and information (for example business proposals, industrial processes and research) it is common to refer to know how and trade secrets. Such protection has encompassed the formula for major consumer products such as Coca Cola and the unpublished information necessary to make effective use of some chemical or pharmaceutical patents.

In Australia the term trade secrets has connotations of commercially sensitive information - secrets - relating to production of goods and provision of services. Such information often results from and embodies expertise and investment.

It is sometimes differentiated from know-how, which refers to information that is valuable to a business, that is not generally available but that could be assembled at considerable cost by competitors.

Such secrets are not necessarily kept in people's heads. Some organisations for example document the knowledge in great detail and protect that information through -

• physical restrictions (eg the manual is kept within a particular production facility, research laboratory or office)
• technological measures (the document uses 'copy proof' paper or a database is encrypted and password protected) - discussed in the following page of this guide
• contract (information is imparted to a narrow range of people who have a contratual relationship with the owner/guardian of that information)
• recourse to equity (common law) and statute law dealing with particular types of information and relationships (eg the national census, taxation and privacy statutes in Australia)
• a corporate culture that secures the commitment of employees (ie people choose to do the right thing on an informed and ethical basis rather than through coercion).

     equity

Treatment of confidential information under the law of equity seeks to prevent unauthorised use and disclosure by one entity of another's confidential information, including ideas, that are communicated in trust and confidence.

Equity coexists with intellectual property, privacy and other law.

It broadly has four requirements regarding the nature of -

• the information - the information must be of a confidential character and thus for example must not be common or public knowledge
• the identification - the information must be specifically identified (although not necessarily in writing) and not merely in 'global' terms
• the communication - the information must have been imparted in circumstances that indicate that the recipient (an organisation or individual) must respect its confidential character
• the use - there must be unauthorised use or threatened misuse (which includes unauthorised disclosure) of the information to the detriment of the entity that communicated it.

In common law the onus is on the person asserting confidentiality to establish those requirements. That person may take action for breach of confidence in equity.

It is important to note that a contractual obligation binds only the parties to the contract. Equity, in contrast, can restrain a third party from disclosing confidential information where that party is aware (eg through a notice or through the circumstances in which information is obtained) that disclosure is unauthorised.

     contract

Organisations and individuals often do not rely solely on equity but instead seek to reinforce their position (and ensure the awareness of those to whom they entrust information) through use of formal agreements. Many agreements are founded on contract law, although it is common for entities to use non-disclosure agreements while formal contracts are under consideration.

Confidentiality obligations under contract may involve employees or a commercial relationship with another entity (eg between two businesses or between a business and a government agency). Questions of privity - essentially the difficulty of enforcing contractual obligations on third parties outside the relationship - mean that common law and other statute law (eg privacy law) may be important.

Confidentiality features in commercial agreements typically concern -

• obligations relating to information in a tangible form (eg in a paper or electronic document)
• obligations for a specified duration
• information that is referred to either by name or in more general terms but whose status is signalled through being marked in a particular way such as 'confidential', 'commercial-in-confidence' or 'proprietary & confidential'
• listing of exemptions to non-disclosure so as to ensure consistency with with statutory obligations and the general law.

Agreements frequently include information that is communicated orally, subject to that information being presented in tangible form within a stipulated time following provision at a meeting or by phone. That restriction can be particularly useful in controlling information provided during discussions prior to the agreement.

As the obligations bind only parties to the contractual agreement confidentiality clauses often require an indemnity regarding loss or damage for unauthorised disclosure by employees, officers or servants of the entity to which information is imparted. Some agreements instead require that the entity ensures there is no unauthorised disclosure by those persons.

Know-How licence agreements typically identify the licensor's obligations (eg provision of technical assistance, training and documentation needed in carrying out the matter that is the subject of the agreement) and the licencee's obligations. The latter generally encompass nondisclosure of confidential information, use of that information only for the purposes specified in the agreement and restriction on market the product/service in the territory assigned by the licensor.

Such an agreement will reflect non-disclosure agreements and usually be underpinned by a licence to reproduce copyright material (eg training manuals and operational guides) produced by the licensor.

     other law

Most nations provide some protection for confidentiality in a range of legislation, including -

• statute law specific to government agencies and operations
• statute law on privacy

In Australia for example federal and state/territory legislation, such as the Commonwealth Crimes Act 1904 (discussed earlier in this guide) and Census & Statistics Act 1905, includes provisions aimed at ensuring confidentiality within government through for example penalties regarding unauthorised disclosure of particular classes of information. Those provisions are not absolute and, for example, coexist with archives and freedom of information enactments.

As noted elsewhere on this site, Part VIII of the federal Privacy Act 1988 imposes an obligation on third parties who have received personal information provided in confidence. Section 93 of the Act enables recovery of damages by the confider and by the individual/s to whom information relates. Section 91 of the same Act preserves the operation of other law, including common law.

     studies

For a UK perspective see Confidentiality (London: Sweet & Maxwell 2006) by Charles Phipps & Roger Toulson.

Later pages of this guide highlight studies on professional privilege, ethics and responsibility, in particular medical obligations. Salient works include Sabine Michalowski's Medical Confidentiality & Crime (Aldershot: Ashgate 2003), Loane Skene's Law & Medical Practice: Rights, Duties, Claims & Defences 2 ed (Chatswood: LexisNexis Butterworths 2004), and papers in Disputes & Dilemmas in Health Law (Leichhardt: Federation Press 2006) edited by Ian Freckelton & Kerry Petersen

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