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Is Breach of Confidence Properly Analysed
in Fiduciary Terms?
Anglo-American jurisprudence recognises that information ob-
tained by reason of. a confidence reposed or in the course of a con-
fidential employment cannot be used to the detriment of the person
from whom or at whose expense it was obtained. There is no clear
consensus in the common law jurisdictions as to the theoretical
basis on which such protection has been granted; adherents of one
school of thought seek to analyse the doctrine in proprietary terms,
while their opponents regard this head of jurisdiction as a creation
of Chancery sui generis and thus not requiring a grounding in
property, contract or tort.
In the United States the mainstream of authority clearly favours
proprietary theory, although this is perhaps due in part to the
greater protection presently afforded non- or quasi-proprietary
interests in that country.” For instance, many United States juris-
dictions accord some protection to intangible personality interests
through an action in tort for intrusion upon privacy. This doctrine
has some commercial application, particularly in the class of case
which Prosser designated as commercial appropriation of the plain-
tiff’s name or business.’-‘ Then, there may exist a doctrine against
reaping where one has nt sown8 based on the so-called I.N.S. prin-
ciple4 the effect of which may not have been entirely extinguished
‘ See Milgrim, Trade Secrets (1978), 1.01[2] 1-7 for a note of those U.S.
jurisdictions adhering to proprietary theory. For a useful general survey
of English law, see Cornish, Protection of Confidential Information in Eng-
lish Law (1975) 6 International Review of Industrial Property and Copy-
right Law 43.
2 Prosser, Torts 4th ed. (1971), 804. Perhaps the best known decision of that
kind is Pavesich v. New England Life Insurance Co. 122 Ga 190, 50 S.E. 68
(1905) (use of picture without consent in newspaper advertisement). Cf. Krouse
v. Chrysler Canada Ltd (1973) 40 D.L.R. (3d) 15 (Ont. C.A.). The “news-
worthiness” privilege grounded on the First Amendment has considerably
restricted the scope of actions in tort for intrusion upon privacy, particularly
so far as public figures are concerned. See Time, Inc. v. Hill 385 U.S. 374
(1967); Virgil v. Time, Inc. 527 F. 2d 1122 (9th Cir. 1975). For substantive “due
process” privacy protection, see DeBoice, Due Process Privacy and the Path
of Progress [1979] U. Ill. L. Forum 469.
in the Law of Unfair Competition (1942) 55 Harv. L. Rev. 595.
See Callman, He Who Reaps Where He Has Not Sown: Unjust Enrichment
4International News Service v. Associated Press 248 U.S. 215 (1918). In this
case the defendant was appropriating news items from the plaintiff. Al-
1979]
COMMENTS
– COMMENTAIRES
by the Erie doctrine. 5 Whatever the reasons, there has been exten-
sive use, in practice, of trade secret protection as a clear commercial
alternative to the federal statutory monopolies These competing
modes of protection (which exist alongside the traditional economic
torts, such as passing-off) have raised difficult constitutional issues
(particularly that of federal pre-emption) which have accordingly
compelled American courts to delineate these various concepts more
dearly than Commonwealth judges have been called upon to do.1
The minority United States position is exemplified by the asser-
tion of Mr Justice Holmes that
the word property as applied to trade-marks and trade secrets is an
unanalyzed expression of certain secondary consequences of the primary
fact that the law makes some rudimentary requirements of good faith.
Whether the plaintiffs have any valuable secret or not the defendant
though it was recognised that the plaintiff had no property rights vis-h-vis
the public in uncopyrighted news after its first publication, the Court held
that it had an equitable quasi-property right in news collected at its own
expense as against the defendant, and therefore equitable relief from unfair
competition could be granted.
5Erie R.R. v. Tompkins 304 U.S. 64 (1938). The U.S. Supreme Court held
that there is no federal common law in diversity cases.
0 See generally Miller, Legal Aspects of Technology Utilization (1974). This
tendency may have been caused in part, and is certainly exacerbated by, the
high attrition iate of patents in actual litigation; in the United States up
to 80% of patents fail depending upon the particular circuit in which suit
is brought. Then, too, empirical evidence in that country suggests that pro-
prietary rights are far less important in commercial terms than marketing
considerations, investment requirements and lead times. The highest demand
(predictably) to occur qua small
for protection for innovations appears
firms entering the market for the first time and larger firms entering
marginal markets: ibid., 7-10. In Canada, 69% of the patents challenged in
the Supreme Court between 1928 and 1969 were held invalid. In all litigation,
nearly 40% were held invalid: Duncan, Canadian Business and Economic Im-
plications of Protecting Computer Programmes (unpublished Ph.D. thesis,
University of Texas at Austin, 1975), 227.
7 The U.S. intellectual and industrial property bar underwent sharp trauma
consequent on the decision in Kewanee Oil Co. v. Bicron Corp. 478 F. 2d
1074 (6th Cir. 1973), rev’d 416 U.S. 470 (1974), in which the Sixth Circuit Court
of Appeals held that state trade secret protection laws were pre-empted
by operation of the federal patent laws and were therefore unconstitutional.
Given that trade secret law is utilised at least as much as patents to protect
private research and development in the United States (see generally Harris
& Siegel, “Trade Secrets in the Context of Positive Competition” in Harris
(ed.), Nurturing New Ideas: Legal Rights and Economic Roles (1969), 82),
the implications of the decision were enormous. The U.S. Supreme Court, in
reversing the decision, held at page 481 that “the maintenance of standards
of commercial ethics and the encouragement of invention are the broadly
stated policies behind trade secret law”.
McGILL LAW JOURNAL
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knows the facts, whatever they are, through a special confidence that he
accepted. The property may be denied but the confidence cannot be.
Therefore the starting point for the present matter is not property or
due process of law, but that the defendant stood in confidential relations
with the plaintiffs, or one of them.8
Mr “ustice Holmes’ perception comes very olose to the philo-
sophy prevailing amongst the judiciary in the British Common-
wealth, particularly since the landmark case of Saltman Engineer-
ing Co. v. Campbell Engineering Co.9 Despite some endeavours to
advance proprietary theory, the Commonwealth judiciary has not
yet been prepared to depart from the basic premise that there is a
“broad principle of equity that he who has received information in
confidence shall not take unfair advantage of it”.’ The attraction
in ‘this approach is not difficult to discern; a principle thus con-
ceived will functionally reach many situations that proprietary
theory will not.” Then, too, Commonwealth judges
today may
favour broad discretionary principles, rather than a strict pro-
prietary approach with the attendant formalistic difficulties.12
8E.I. DuPont de Nemours Powder Co. v. Masland 244 U.S. 100, 102-3 (1917).
The American Law Institute also rejected the property concept of trade
secrets: Restatement of Torts vol. 4, 757, Comment (a) (1939).
9 (1948) 65 R.P.C. 203 (C.A.). The equitable obligation was largely over-
looked in the numerous nineteenth century master and servant cases, in
‘which protection was granted on the basis of an implied term of secrecy in
the contract of employment. See Hammond, Developments in the Equitable
Doctrine of Breach of Confidence [1976] N.Z.L.J. 278, 279.
‘oSeager v. Copydex, Ltd [1967] 2 All E.R. 415, 417 (C.A.) per Lord Denning
M.R. See also Conveyor Co. of Australia Pty Ltd v. Cameron Bros. Engineer-
ing [19733 2 N.Z.L.R. 38 (S.C.); New Zealand Needle Mfrs Ltd v. Taylor
[1975] 2 N.Z.L.R. 33 (S.C.); Interfirm Comparison (Australia) Pty Ltd v.
Law Soc’y of New South Wales (1975) 5 A.L.R. 527 (S.C. N.S.W.); Professional
Maintenance Systems of Canada Ltd v. Smits (1978) 40 C.P.R. (2d) 160 (B.C.
S.C.); Unicure, Inc. v. Thurman (1978) 41 C.P.R. (2d) 97 (Ont. H.C.); Stephen-
son v. Babity Motors Ltd (1978) 40 C.P.R. (2d) 187 (BC.S.C.); Canadian Javelin
Ltd v. Sparling (1979) 4 B.L.R. 153 (F.C.T.D.). For recent arguments in favour
of proprietary theory, see North, Breach of Confidence: Is There a New
Tort? (1972) 12 J.S.P.T.L. 149; Ricketson, Confidential Information – A New
Proprietary Interest? (1977) 11 Melbourne U. L. Rev. 223; Libling, The Con-
cept of Property: Property in Intangibles (1978) 94 L.Q.R. 103; U.K. Law
Commission, Breach of Confidence (Working Paper No. 58)
lQuaere whether proprietary theory would have reached Duchess of
Argyll v. Duke of Argyll [1967] Ch. 302 (marital confidences); Attorney General
v. Jonathon Cape Ltd [19753 3 All E.R. 484 (Q.B.)
(Cabinet confidences);
Foster v. Mountford & Rigby Ltd (1977) 14 A.L.R. 71 (S.C. N.T.) (aboriginal
tribal secrets).
12 See, e.g., the judgment of Lord Wilberforce in Johnson v. Agnew [1979]
2 W.L.R. 487, 490 (H.L.), wherein he addresses “the mystification which has
been allowedto characterise contracts for the sale of land, as contrasted
(1974).
19791
COMMENTS –
COMMENTAIRES
Those objections apart, at least two logical difficulties in cate-
gorising confidential information or know-how as property are en-
countered at a purely abstract level. First, circularity in reasoning
is surely involved in the assertion that the term “property right”
(whether in tangible or so-called “intangible” property) may be
attached to what is no more than a result of the courts’ considera-
tion of the total issues at stake in the proceedings.’ 3 Second, it
seems highly unorthodox to describe as property that which “eva-
porates” when it reaches the public domain,14 or when third parties,
whether independently or by reverse engineering, make the same
discovery.15
Many critics of the proprietary approach, however, are equally
unwilling to embrace an overly-broad equitable doctrine, and re-
with other contracts, … [and the] accumulated debris of decisions and text
book pronouncements which has brought semantic confusion and mis-
understandings into an area capable of being governed by principle”.
13 Cf. Colbeam Palmer Ltd v. Stock Affiliates Pty Ltd (1968) 122 C.L.R. 25,
34 (Austr. H.C.) per Windeyer J., wherein his Lordship draws attention to the
circularity involved in the argument that because injunctions were granted
in equity to restrain interference with particular subject matter (e.g., passing
off by use of the plaintiff’s common law trade mark), that subject matter
became a form of property arid was therefore entitled to the equitable
protection granted to established property interests. However, if that were
so, then there would have been no need for the “equitable” intervention in
the first place. Equity attacks the improper user; it makes no judgments as
to the property.
‘4 See, e.g., Smith v. Dravo Corp. 203 F. 2d 369, 373 (7th Cir. 1953) per
Lindly Cir. J.: “That which has become public property cannot be recalled
to privacy”; Mustad v. Allcock (H.L. 1928) reported late in [1963] 3 All E.R.
416 when the importance of the decision was recognised. See also Stedman,
Trade Secrets (1963) 23 Ohio St. LJ. 4 where the “evaporation” argument is
made. The reply which is usually made to the “evaporating property” argu-
ment is that there are many situations where, by operation of law, property
rights are extinguished (e.g., loss of common law copyright, adverse posses-
sion, loss of monopoly patent rights by effluxion of time). See Milgrim,
supra, note 1, 1.01[2] 1-6 and National Starch Prods. Inc. v. Polymer Indus.,
Inc. 273 App. Div. 732, 79 N.Y.S. 2d 357 (1st Dept 1948), leave to appeal denied,
274 App. Div. 822, 81 N.Y.S. 2d 278 (1948).
15The propriety of reverse engineering received the imprimatur of the
U. S. Supreme Court in Kewanee Oil Co. v. Bicron Corp., supra, note 7. See
also E.I. du Pont de Nemours & Co. v. Christopher 431 F. 2d 1012 (5th Cir.
1970), cert. denied 400 U.S. 1024 (1971), where it is suggested that there may be
an active duty to guard against ordinary discovery. In that case an aeroplane
hired by competitors circled an uncompleted methanol plant and took photo-
graphs. The Court noted at page 1016: “Perhaps ordinary fences and roofs
must be built to shut out incursive eyes, but we need not require the dis-
coverer of a trade secret to guard against the unanticipated, the un.
detectable, or the unpreventable methods of espionage now available”.
McGILL LAW JOURNAL
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cently the notion that the equitable obligation of confidence is
doctrinally dependent upon the spectrum of fiduciary obligations
seems to have gained some acceptance. Gowans I. in Ansell Rubber
Co. v. Allied Rubber Industries6 seemingly sought to categorise it
thus, and in Whimp v. Kawakawa Engineering Ltd, Chilwell 5.
claimed: “From my reading [of] the authorities, it matters not
whether a proprietary right as such exists. Equity steps in to pre-
vent a breach of confidence in circumstances where something akin
to a fiduciary duty exists”. 17 Finn included breach of confidence in
his recent treatise on fiduciary obligations,’ and Dessemontet has
asserted that “no obligation to secrecy ever arises from the dis.
closure itself, but only pre-existing or simultaneous fiduciary rela-
tionships give rise to it”.Y9 Conversely, Goff and Jones, in their work
on restitution, maintain a formal (and apparently deliberate) dis-
tinction between “breach of fiduciary relationships” and “benefits
obtained in breach of confidence”.20 In addition, the learned authors
of an Australian treatise assert that “obligations of confidence arise
other than between fiduciaries as traditionally understood and there
seems little served by burdening that already difficult area of
equity with an additional and disparate category”.21
Given the divergent academic viewpoints and the paucity of
judicial pronouncements on the issue, the recently reported decision
of the New Zealand Court of Appeal in A.B. Consolidated Ltd v.
Europe Strength Food Co.2 2 is of some interest. The facts of the case
would make a suitable textbook illustration of the typical breach
of confidence case. Both parties were manufacturers of confec-
tionary. The plaintiff (Europe) was an Australian based company;
16 [1967] V.R. 37 (S.C.).
-1 S.C.N.Z., Nov. 29, 1977, A. No. 105/75, Whangarei Registry (unreported), 16.
18 Fiduciary Obligations (1977), 159-68.
19 The legal protection of know-how in the United States of America 2d ed.
(1976), Clarke (trans.), 337 [emphasis added].
20 The Law of Restitution 2d ed. (1978), chs. 34 and 35.
2 l Meagher, Gummow & Lehane, Equity, Doctrines and Remedies (1975), 722.
Breach of confidence and fiduciary obligation can be easily confused because
in some cases the duty of confidence may arise out of the fiduciary relation-
ship itself and be one dimension of that duty (see, e.g., Westminster Chemicals
NZ Ltd v. McKinley [1973] 1 N.Z.L.R. 659 (S.C.) and Dunford & Elliott Ltd v.
Johnson & Firth Brown Ltd [1977] 1 Lloyds L.R. 505 (CA.)) but it is a long
step, and, it is submitted, an incorrect one, to assert that breach of confidence
is either doctrinally based upon or somehow parasitic upon fiduciary
concepts. Gibson J. in-Canadian Javelin Ltd v. Sparling, supra, note 10, 167, re-
cognised the suggested distinction.
22 [1978] 2 N.Z.L.R. 515 (CA.).
19791
COMMENTS – COMMENTAIRES
the defendant (A.B.C.) was domiciled in New Zealand. Europe,
after successful experimentation, marketed health food bars con-
taining fruit or nuts in transparent packages which attractively
exposed the ingredients to visual inspection. A.B.C. had attempted
the same process itself without much success. Negotiations ensued
between Europe and A.B.C. for a licensing agreement whereunder
A.B.C. would produce Europe’s bar in New Zealand. When it
seemed likely that agreement would be reached, A.B.C. was per-
mitted to inspect Europe’s plant while the bars were being pro-
duced. The process itself was revealed as a novel combination of
several well-known and relatively simple procedures. Subsequent
to the inspeotion, A.B.C. commenced production of similar bars.
No formal agreement with Europe was ever concluded. The New
Zealand Supreme Court granted the plaintiff’s request for a per-
manent injunction and ordered the defendant to account for its
profits3
Before the Court of Appeal, counsel for the appellant urged that
“there must be some sort of contractual nexus or at least a re-
cognised relationship of a fiduciary kind before a remedy would be
given for the misuse of confidential information”. 4 Woodhouse J.
would have none of it. On the first issue he asserted that “.the
obligations of confidence relied upon … are founded in equity and
arise quite independently of contract – or of tort”.2 In that respect
Woodhouse J. was squarely in line with previous Australasian
authority.2 In enlarging on the submission of the need for a rela-
tionship of a “fiduciary kind”,27 counsel further urged that “in the
absence of any stipulation as to confidence, the Court should be
reluctant to accept the existence of such a relationship in the case
of commercial organisations dealing with one another from re-
latively equal positions of strength” 2 8 The Court again rejected
the bait. “The issue is not whether some special kind of relationship
can be recognised and given a label but whether the circumstances
give rise to a situation where the obligation of confidence fairly
rests upon the party receiving the information.” 9
2 Unreported, March 6, 1978, per Somers J.
24 Supra, note 22, 520.
25 Ibid.
21 See supra, note 10.
2Counsel may have been attempting to mirror the language of Chilwell J.
in the Whimp case, supra, note 17.
2 8 Supra, note 22, 522.
2 Ibid., 523.
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The Court cited no authority for what appears to be a clear re-
jection of the argument that the equitable doctrine of breach of
confidence is somehow doctrinally dependent upon the concept of
fiduciary obligations. However, the Court could have referred to the
persuasive authority of the Supreme Court of Canada decision in
Canadian Aero Service Ltd v. O’Malley.3 0 In that case, Laskin J.
(as he then was) nioted:
I do not see that either the question of the confidentiality of the informa-
tion acquired by O’Malley and Zarzycki in the course of their work
for Canaero on the Guyana project or the question of copyright is
relevant to the enforcement against them of a fiduciary duty. The fact
that breach of confidence or violation of copyright may itself afford a
ground of relief does not make either one a necessary ingredient of a
successful claim for breach of fiduciary duty.3 ‘
Canaero has been trenchantly criticised by Roberts on the basis
that the Court got itself hopelessly muddled over the relationship
between “the law of confidential
information and the law of
fiduciary relationships and as a result perpetuated the erroneous
notion of their mutual exclusivity”.32 He further argues that “be-
cause the same information or knowledge is susceptible of a number
of different characterizations it is irrational to wed to the charac-
terization selected the body of law applied”.P The Europe case
involved no possibility of the application of fiduciary theory (at
least as conventionally understood), and the process was not in
the public domain, thereby making breach of confidence a suitable
vehicle for a claim. In Canaero, however, the case could arguably
have been treated under the rubric of corporate opportunity as well
as breach of confidence. To that extent Canaero was a more difficult
case, although even Roberts –
the most determined critic of that
case –
approves of the result the Court reached.
Thus, two senior Commonwealth appellate courts (and at least
one Canadian Federal Court judge) have clearly rejected the ne-
cessity to link the equitable duty of confidence with the spectrum
of fiduciary duties.3 4 It is submitted that they were right to do so.
30.[1974] S.C.R. 592.
31 Ibid., 616. See also Canadian Javelin Ltd v. Sparling, supra, note 10.
32 Roberts, Corporate Opportunity and Confidential Information: Birds of
a Feather that Flock Together or Canaeros of a Different Colour? (1977) 28
C.P.R. (2d) 68, 69.
33 Ibid., 110.
84 The reasoning of the New Zealand Court of Appeal in the Europe case
on the issue of the duration of the injunction is not pursued here. (That
issue has been a difficult one: see Braithwaite, Trade Secrets: The Spring’
board Unsprung (1979) 42 M.L.R. 94, 96.) The Court took the position that “it
19791
COMMENTS – COMMENTAIRES
To circumscribe the equitable duty, which has heretofore been
regarded by Commonwealth judges as a head of equity jurisdiction
sui generis, by restricting its application to those situations governed
by the law relating to fiduciary obligations would be to seriously
stunt (if not terminate) the growth of the doctrine of breach of
confidence. Anglo-Commonwealth jurisprudence is not so healthily
endowed with judicially created concepts which can usefully be em-
ployed in an information conscious age that it can afford to have
the scope of the present duty thus, curtailed.35
There are two clear alternatives open to Commonwealth juris-
dictions in respect of this important (and developing) area of the
law and a conscious election must be made between them. The first
is to continue to allow the doctrine of breach of confidence to
develop as a matter of judge-made law.36 The second is to attempt
a complete re-evaluation of the rationale for the doctrine and its
relationship to other concepts and policies. In this respect the
spectrum is much wider than that which was considered by the
English Law Commission in its working paper on breach of con-
fidence;37 it runs all the way from the statutory monopolies (patent,
is not sufficient for a defendant to answer a request for an injunction on
the basis, by itself, that the information could be discovered independently
or that it was likely to become a matter of public knowledge. The real
answer (and not merely .as a matter of commercial morality) is to avoid
a situation of confidence that could result in subsequent embarrassment. It
may be that in certain cases where such a situation has developed almost
fortuitously the Court will prefer the remedy of damages to that of in-
they
junction. However, those who seek and accept information which
know has been given in confidence for a limited purpose ought not to be
able to misuse it feeling that a money payment will sufficiently balance the
present and future injury thereby caused to their informant”: stcpra, note
22, 525.
35 Cf. the common law remedies available in the U.S., supra, text between
notes 1 & 6.
3GThis alternative was favoured in Torts and General Law Reform Com-
mittee of New Zealand, Protection of Trade Secrets (1973). Its conclusions
were as follows: “Our survey of the law on this matter and of such other
materials as were available to us has led to the conclusion that there is no
need for major change in the existing law. In our view, the existing actions
available at common law and equity provide a satisfactory remedy in those
cases outside the patent system where protection is desirable. The Courts
have shown a willingness to develop the equitable principles relating to
breach of confidence in order to cover new types of situation. At the same
time the rules developed by the Courts have proved sufficiently flexible to
take account of other interests, mainly the interests of employees and society
in the mobility of labour and utilisation of special skills, and the public
interest in receiving disclosure”:
ibid., 17.
37 Supra, note 10.
McGILL LAW JOURNAL
(Vol. 25
copyright and trade mark) to privacy concepts.38 If this alternative
were selected, it would be necessary to ascertain the points at which
contractual protection, breach of confidence, fiduciary obligations,
economic torts, and notions of unfair competition should appear
along the aforementioned continuum. Limiting the re-evaluation of
breach of confidence to its categorisation as part of the fiduciary
spectrum or as a tort would leave unanswered as many problems as
it might solve and put the issues right back where they began –
in the courts. Moreover, critical issues may remain unarticulated
or be avoided. For instance, what was the real result in Europe?
Is it that at the end of the day the plaintiff received more extensive
protection (at least as against the particular defendant) than it
could have gained through the patent system? It is not clear on the
facts of the case as recorded in the judgment of Woodhouse J.
whether the “process” was clearly patentable, not patentable, or
even arguably patentable. If the process had been patented there
would have been a time limit to the statutory protection against
the world in all the various common law jurisdictions. The patent
laws proceed on the rationale that the monopoly
is granted
for a limited term in exchange for the inventiveness of the originator
being placed in the public domain at the end of the statutory period.
Was this a case where the plaintiff had deliberately chosen to go
outside the statutory possibilities and rely on the “weaker”13 ,
system of trade secret protection? If so, what does the actual result
even though Woodhouse J. was astute enough to
in that case –
38 “Privacy” as a concept compared with “confidence” as a concept merits
much closer examination. It is surely remarkable (yet unremarked upon in
any published work to date) that the English cases on which Warren &
Brandeis relied to suggest a right of privacy, in their seminal article The
Right to Privacy (1890) 4 Harv. L. Rev. 193, are the identical cases which
are usually claimed in the older authorities as giving rise to an equitable
duty of confidence in English law: see, e.g., Prince Albert v. Strange (1849)
1 Mac.-& G. 25, 41 E.R. 1171 (Ch.). Does that suggest that the underlying
policies for the two causes of action share at least some essential features
(particularly in the appropriation cases)? See Woodward v. Hutchins [1977]
1 W.L.R. 760 (C.A.), and Hammond, Superstuds and Confidence [1977] N.Z.L.J.
464. Does it also suggest that English judges have found the concept of con-
fidence wide enough to gather in at least some situations which in the
United States would have clearly been fought as “privacy” issues? See, e.g.,
Foster v. Mountford & Rigby, supra, note 11.
39See the U.S. Supreme Court’s decision in the Kewanee case, supra, note
7, 489. The system is “weaker” because it gives no protection against reverse
engineering, it does not operate against the world, and there appears to be
greater risk of interception.
1979]
COMMENTS – COMMENTAIRES
emphasize that it applied only against “this. defendant”40 –
do to
the conventional wisdom that the patent system is itself an excep-
tion to anti-monopoly and free enterprise theory as supposedly de-
marcated and enforced through restrictive trade practices or anti-
monopoly legislation? Does this kind of result mean that there are
not one, but two islands of monopoly (patents and trade secrets) in
a sea of free competition?
These kinds of issues suggest a need, not so much to find the
most appropriate peg on which to hang the concept of breach of
confidence, but rather to shift the inquiry from a predominantly
doctrinal debate to a resolution of the actual and potential con-
flicts between several useful working vehicles along the wide spec-
trum previously suggested. To state the matter thus is not to decry
the necessity for a sound doctrinal base but rather to suggest that
some closer debate on functional purpose, economic efficiency, and
empirical result of the concept of breach of confidence might lend
greater perspective to an admittedly difficult area bf the law. 1
Given the increasing use being made of the cause’of action as a
vehicle for resolution of information-related disputes in a ,techno-
logical age, it seems inevitable that Canada, too, will soon be con-
fronted with the need to make the suggested election.
R. G. Hanmnond*
R.P.C. 41 (Ch.).
4oSupra, note 22, 525. See also Coco v. A.N. Clark (Engineers) Ltd [1969]
41 It is surprising that such relatively intensive studies as have been done
in the industrial and intellectual property area in Canada to date appear to-
have overlooked the critical importance of “black box” technology. “Black
box” protection includes such practices as putting -new and sophisticated
electronic devices into a small unit and sealing it in such a way that it will
sell-destruct or be incapable of having reverse engineering -applied to it on
close examination. To ignore or overlook the issue of this sort of trade secret
protection versus patent (or other statutory monopoly) protection is to miss
the single most critical issue. This fundamental flaw is apparent in Economic
Council of Canada, Report on Intellectual and Industrial Property (1971);
Hindley, The Economic Theory of Patents, Copyrights, and Registered
Industrial Designs (1971); Firestone, Economic Implications, of Patents (1971).
Some greater perception was demonstrated by Duncan, supra, note 6, 234-73.
*LL.B. (Hons.), M. Jur. (Auckland), LL.M. (Illinois), of the New Zealand
bar. Associate Professor of Law, Dalhousie University.
