LHAG Insights Alert 20230523: Preserving Confidentiality In IT & Telecommunications Projects

• Published date: 30 May 2023
• Subject Matter: Media, Telecoms, IT, Entertainment, IT and Internet, Mobile & Cable Communications
• Law Firm: Lee Hishammuddin Allen & Gledhill
• Author: Chan Mun Yew

Safeguarding Secrets: Preserving Confidentiality in Information Technology (IT) & Telecommunications Projects

Information Technology (IT) and telecommunications projects often entail a transfer of vast amounts of sensitive, proprietary and confidential information/data between organisations. This remains the case irrespective of the magnitude and complexity of the project concerned. Breach of confidence therefore poses significant risks to organisations - it threatens the integrity of business operations and compromises the competitive advantage of businesses in the industry. It is for these reasons that the tort of breach of confidence was formulated to safeguard confidentiality in commercial transactions.

Elements of Breach of Confidence

Liability under the tort of breach of confidence arises when three elements are proven on the balance of probabilities:

1. the information sought to be preserved must have the necessary quality of confidence;
2. Information must have been disclosed in circumstances importing an obligation of confidence; and
3. there must be an unauthorised use of confidential information.¹

1^st Element - Necessary Quality of Confidence

In every claim for breach of confidence, the information sought to be protected must be identified clearly and precisely. Failure to do so may result in the claim being dismissed by the Courts at the outset.²

Further, the law only imposes confidentiality on information that has the necessary quality of confidence. In other words, the law does not protect information which are trivial or those which are within the public domain.³ Ultimately, the question of whether any particular information has such quality of confidence, is a question of fact to be determined by the Courts based on the factual circumstances of each individual project.

Relevant factors would include:

1. extent of which such information is known outside of the organisation or within the industry;
2. extent of measures taken to safeguard secrecy of such information;
3. value of information to the organisation and its competitors;
4. amount of effort or resources expended in developing the information; and
5. ease or difficulty in duplicating the information.⁴

Common examples of information with necessary quality of confidence include:- trade secrets; technology knowhow or methodology; specific program codes or algorithms; technical reports; market research etc. There is no question of breach of confidence if the impugned information is within the defendant's...