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Canada | Publication | April 2020
Owners of confidential information – or trade secrets – face a particular challenge in protecting their rights: once their confidential information has been disclosed beyond those entitled to hold the secret, it can be difficult to stop further dissemination.
This is particularly true when such information ends up in the hands of an innocent recipient who may not realize that the information is confidential or that they are not supposed to have it or disclose it to others. As the information moves into the hands of multiple people, the ability to ultimately maintain the information as confidential becomes more and more difficult. When dealing with highly sensitive commercial information or trade secrets, a loss of confidentiality can be catastrophic to a business and all efforts must be made to maintain confidentiality despite increasing dissemination.
But how does one put the toothpaste back into the tube?
In some cases, where the information has already been broadly disclosed or posted publically online, there may be no way to regain confidentiality and the right-holder must seek recourse through other remedies, such as damages for breach of confidence.
However, if the leak of information is caught early enough, the answer may be a “cascading” injunction that pulls under its umbrella each recipient of the information throughout the distribution chain.
The British Columbia Supreme Court granted just such an injunction recently in Cascade Aerospace Inc. v. AGNL Avionics Abbotsford Nominee, ULC, Docket S197182, July 30, 2019 (unreported).
Cascade Aerospace, a privately-held specialty aerospace and defence contractor, had provided to its landlord, as required by its lease agreement, certain confidential financial information. The lease agreement required the landlord to maintain that information in confidence. A snapshot of Cascade’s confidential financial information came back to Cascade from a third party, who had received it from another third party. Cascade learned that the financial snapshot containing its confidential financial information had been circulated by AGNL to a number of third parties as part of a marketing package for the sale of a portfolio of assets, including leased property.
After AGNL refused to disclose the parties who had received Cascade’s confidential information, Cascade served a Notice to Arbitrate, as required under the lease, and sought an interim injunction from the BCSC that sought to “scoop up” and deal with all possible disclosures of the information by:
As long as all individuals who receive a copy of the order comply with the order, the injunction should reach everyone who inappropriately received such information as a result of AGNL’s initial breach and such individuals are bound by the terms of the order to refrain from disclosing the information further. Thus, the breach can be contained.
The BCSC granted an injunction to Cascade on the terms sought – modifying the injunction slightly to apply to any person having notice of the order, as opposed to AGNL itself, leaving the underlying lease to govern AGNL’s activity – applying the classic RJR-MacDonald test of (i) prima facie case; (ii) irreparable harm; and (iii) balance of convenience. The court rejected numerous arguments raised by AGNL, making the following findings of note:
This type of cascading injunction, that pulls in all recipients of confidential information, can be a powerful tool when a breach is identified early on and dealt with before the information truly becomes public.
Cascade Aerospace was represented by Karen MacDonald and Madeleine Hodgson of our Vancouver office.
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