What is Meant by Commercial in Confidence?
By Joanne Hue, Last updated: 2022-06-08 (originally published on 2021-11-26)
The term “commercial in confidence” means the commercial information which is secret between the two parties and if this information is revealed to any third party then it may cause damage to the other party.
‘Commercial in confidence’ is in the form of trade secrets, intellectual property, or sensitive commercial valuable information. Therefore, any information which is marked Commercial in Confidence must not be disclosed to anyone without permission from the party to whom it relates.
Any unauthorized use of such confidential information will result in a breach of confidence, hence, it is required that the party understands its rights related to the confidential information.
This is important for those who are engaged in business together and it is paramount to protect the business interest of both parties. Its application varies for different industries and organizations. This article discusses the sensitive information, types of sensitive information, how confidentiality clauses protect such sensitive information.
How do you use commercial in confidence?
Commercial in confidence usually is in the form of a term in a confidentiality clause which imposes an obligation to not disclose such commercially sensitive information or a separate confidentiality agreement is entered between the parties to protect sensitive information.
What is sensitive information?
Sensitive information is the one that is not accessible to any other person unless granted specific permission and it must be protected from disclosure. Any individual or an organization will need to put many restrictions on the use or access of his information by third parties.
For example, any breach of confidential information of an individual or organization poses threats like spying, cyber-attacks, and revealing of secret information in case of government sensitive information. This information can take either physical or electronic forms.
In whatever form it is present, it is considered as exclusive information or data of someone and such information can be classified into three categories which are discussed below.
What are the three types of sensitive information?
The three types of sensitive information are mainly:
- Personal information:
Any information related to an individual and if disclosed to anyone, it could harm the concerned person is known as personal information. Most individuals have personal information dispersed over different industries and organizations.
Such information includes biometric information, social security numbers, passport number, medical data, and financial information such as bank accounts, credit cards, tax reports, etc.
- Business information/ Commercially sensitive information:
There is no universally accepted or settled definition of commercially sensitive information. It is not even defined in a Black’s Law Dictionary. In broader terms, it is understood as any information which has economic value or could cause harm if disclosed. Any business data or information is released to the public or any competitor could harm the business.
Also, what comprises commercially sensitive information differs in different industries. Generally, it is defined in relation to trade secrets which is defined as:
“A trade secret may consist of any formula, pattern, device, or compilation of information which is used in one’s business, and which gives [the holder] an opportunity to obtain an advantage over competitors who do not know or use it.”
It further includes customer data, marketing strategies, financial information, intellectual property, and other sensitive data. Where information relating to customers or its stakeholders is disclosed or released, the company has to remedy the breach by facing financial penalties, and also, it hampers the company’s reputation.
- Classified information:
Any information restricted by the government body due to security purposes is classified information. Such information is labeled as confidential, secret, or restricted, etc. It limits the people who have access to it. Once the risk of disclosing that information is surpassed, then such information is made available to the public.
How do you protect commercially sensitive information?
Commercially sensitive information is best protected through Confidentiality Agreements. Such agreements are also entered where the businesses might require a prior exchange of sensitive or confidential information.
It is intended to protect commercially sensitive information such as trade secrets, financial information, intellectual property which may either be discussed during the negotiation process or after the agreement is entered between the parties.
The main purpose of this agreement is to refrain the party from disclosing, misusing for its own benefit, or to prevent from conveying the information to the business competitors in case negotiation fails.
What is the difference between a Confidentiality Agreement and a Non-Disclosure Agreement?
The terms confidentiality agreement and a non-disclosure agreement create confusion among people as if they are the same or different from each other. Both of these serve a similar purpose which is the protection of confidential information.
The minor differences arise with respect to the industries in which they are used but there are no legal differences as to their meaning.They are used simultaneously and both must contain the parties’ names, consequences of breach, what is private information, and formal restrictions against the use of confidential information.
The other names used for such agreements are the Secrecy agreements or Proprietary information agreements. Whatever the name you choose, it is a matter of preference.
Ultimately, the purpose of both the agreements is to protect sensitive information from access by the public or third parties. The difference is in terms of context rather than content.
- Non-disclosure Agreements: These are used to protect private or personal information from disclosure to the public or third parties such as customers, suppliers, investors, or vendors. Non-disclosure agreements are unilateral agreements where one party is held responsible/liable for disclosing personal or private information.
The parties may opt to protect or keep the information confidential such aspricing agreements, trade secrets, new inventions, financial information, and intellectual property.
- Confidentiality Agreements: Where the emphasis is more on confidentiality than non-disclosure, it may require advanced means such as security measures to protect databases or steps to control employee theft.
These are common as bilateral agreements and are signed between employees and employers to protect trade secrets or confidential information of the company.
What do I do if there has been a breach of confidence?
To prove that there is a breach of confidence, the person must establish that the information was confidential and it was passed to the other person for agreed or limited purposes. The other person acted in breach of confidence and used or passed that information without consent and to the detriment of the owner.
The complainant can choose to claim one or more of the below remedies to be decided by the judge. The claimant can claim:
- monetary compensation in terms of damages,
- the injunction to stop or refrain from the acts of another person (where an ex-employee has stolen customer information to use and set up his own business)
- exemplary damages for additional punishment or
- account of profits to claim back the profits the person has made from the breach (where an ex-employee has already set up his own business and stolen customers using information)
As companies or businesses generate and process a large amount of data, it is paramount to protect such information and their trade secrets from disclosure. Commercial in confidence safeguards private or confidential information through confidentiality clauses or agreements. Confidentiality clauses are incorporated into agreements.
If such clauses or agreements would not have been in place then it would have been difficult for a person or company to sue the other party acting in breach of confidence or to refrain from misusing or disclosing it to the rival parties. In some cases, they are even important at the negotiation stage which requires the exchange of sensitive information.
Given the complexity of business transactions and the exchange of sensitive information, such agreements play a great role in protecting commercially sensitive information.
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