Trade Secret Enforcement In Canada Versus The United States ' What's Changed Since Pre-Pandemic?

• Published date: 23 August 2023
• Law Firm: Gowling WLG
• Author: Mr Michael Crichton and Will Boyer

In January 2019, we compared and contrasted trade secret enforcement in Canada to the United States. After what felt like a decades-long pandemic, and with a fast evolving trade secret landscape, did our pre-pandemic comparison stand the test of time? What has changed?

1. Jurisdiction for trade secret enforcement in Canada

With respect to trade secret enforcement in civil matters, the law in Canada remains as it was in 2019. That is, there is no Trade Secrets Act, federal or provincial, similar to the Defend Trade Secrets Act in the United States. Instead, trade secrets are governed and enforced through common-law principles and torts (e.g., breach of confidence, breach of fiduciary duties and breach of contract).

Legal action for trade secret enforcement therefore takes place in the provincial Superior Courts, and not the Federal Court of Canada. The Federal Court has only statutory jurisdiction; without a Federal Trade Secrets Act granting the Federal Court jurisdiction, it has no direct jurisdiction over trade secret claims.

In our 2019 article, we referred to the Netbored¹ decision to exemplify this lack of jurisdiction, where the Federal Court struck Netbored's claims for breaches of contract, confidence and fiduciary duty. More recently, this principle from Netbored was applied in Planit Software.² Mr. Beaver Inc. was defending a copyright infringement action before the Federal Court. The product accused of infringement was acquired through an asset purchase agreement with a third party. Mr. Beaver Inc. tried to third party claim against this third party, which included a claim for common-law misrepresentation. The Federal Court struck this claim as outside of the Court's jurisdiction, citing Netbored.

While not a trade secret case, Planit Software reinforces the principle that trade secret disputes remain confined to the jurisdiction of provincial Superior Courts, not the Federal Court. This principle applies even in situations like Planit Software where the Federal Court has jurisdiction over part of the action (e.g., copyright infringement).

In addition to civil matters, there is new criminal jurisdiction for trade secret matters. Section 391 of Canada's Criminal Code makes it an offence to knowingly obtain, communicate or make available a trade secret by deceit, falsehood or other fraudulent means. This new provision of the Criminal Code has yet to be considered by Canadian Courts, and it is unclear the extent to which this provision is being prosecuted by law enforcement agencies, especially since most police and Crown investigations are not publicly visible in the pre-trial stages. Since trade secret misappropriation often involves a commercial aspect where the rights...