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Trade secrets: It's now a crime to misuse them!

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In an important development, the new three-way trade agreement among Canada, the United States, and Mexico came into force on July 1, 2020, replacing the former NAFTA agreement.  Although many may feel that this news is of little importance to them, there are some elements that deserve greater attention by the public at large.

Many may not appreciate that one of the required changes was to Canada’s criminal law.  New offences were created under the Criminal Code in relation to trade secrets (sometimes known as “confidential information”).  For the purposes of the Code, “trade secrets” are defined as “any information” that:

(a) is not generally known in the trade or business that uses or may use that information;

(b) has economic value from not being generally known; and

(c) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

It is now an offence if:

by deceit, falsehood or other fraudulent means, one knowingly obtains, communicates or makes available a trade secret;

or

one knowingly obtains, communicates or makes available a trade secret knowing that it was obtained by deceit, falsehood or other fraudulent means.

If found guilty, these offences can result in imprisonment for as long as 14 years!

It should be noted that it is not a crime if the trade secret was obtained by independent development or by reason only of reverse engineering.

Because of the broad wording of these new Criminal Code provisions, anyone who works with the confidential information of others, such as in the course of employment, should take great care not to reveal trade secrets to others, especially when changing employers. Similarly, persons offered the trade secrets of others, for example when taking on a new employee, should beware if the employee is offering to “share” information learned at a prior place of employment.

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