The Law Of Confidence In Malaysia

• Published date: 17 August 2022
• Subject Matter: Employment and HR, Intellectual Property, Contract of Employment, Trade Secrets
• Law Firm: Azmi & Associates
• Author: Ms Melinda D'Angelus and Vanessa Iskandar Ng

Every employee owes a duty of good faith or fidelity to his employer which requires that he does not use or disclose any confidential information gained in the course of his employment without the employer's consent. The company's confidential information is important as it allows the company to compete with its competitors. If the said confidential information is exposed to a third party, it will weaken the company's competing powers against its competitors and subsequently cause huge loss to the company.¹ It has to be noted that the duty of confidentiality extends even after the employment contract ends.²

The courts have held that what makes the information confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process. Hence, when the recipient of the information makes use of the information, he avoids from doing the work and saves himself the time and trouble of having to do the work notwithstanding the fact that he is capable of doing it.³

An employee's obligation of confidence applies to his employer's trade secrets⁴ such as manufacturing processes, secret formula, cost prices, quoted prices, specific needs and requirements of the customers and suppliers, status of all on-going negotiations with the customers, and price list.⁵

However, it has to be borne in mind that not all information will be classified as confidential. A former employee is not prevented from using the skill and knowledge in his trade of profession which he has acquired in the course of his employment.⁶ On termination of employment, only information that qualifies as a trade secret or its equivalent would be protected.

Elements to Prove Breach of Duty of Confidentiality

Duty of confidentiality can be traced back to the case of Coco v AN Clark (Engineers) Ltd [1969] RPC 41 wherein the court held that that there are three elements essential to a cause of action for breach of confidence namely:-

a. that the information was of a confidential nature;

b. that it was communicated in circumstances importing an obligation of confidence; and

c. that there was an unauthorised use of the information.

In deciding whether or not there is a breach of confidentiality committed by an employee, our courts have applied the principle formulated in the abovementioned case. The High Court in the case of Rotta Research Laboratorium SPA & Anor v Ho Tack Sien & Ors (Chai Yuet Ying, third party)...