Canadian employers often use NDAs to protect trade secrets, but the definition of what qualifies as a trade secret in Canada is narrower than many contracts suggest. Before you sign an NDA that restricts what you can do with information in your head, it is worth understanding whether that information actually qualifies for protection — and whether the contract goes further than it legally could.
What is a Trade Secrets?
A trade secret in Canada is information that: (1) is secret (not generally known to the relevant industry), (2) has commercial value because it is secret, and (3) has been subject to reasonable steps to maintain its secrecy. Canadian trade secret law is largely based on the common law of breach of confidence. There is no unified federal trade secrets statute like the United States' Defend Trade Secrets Act (DTSA). NDAs can extend protection beyond strict trade secrets to other confidential business information, but courts will not protect information that is merely the general skill and knowledge an employee develops at work.
Red flags to watch for
Your general professional skills and know-how developed through employment are not confidential information. A contract cannot prevent you from using what you know how to do.
A confidentiality obligation without a clear definition of what is confidential is both impractical and potentially unenforceable. You cannot comply with an obligation you cannot identify.
Some NDAs and employment contracts include IP assignment clauses that extend to personal projects. Most provinces limit employer rights to inventions made using employer resources or during employment.
A customer list from 3 years ago is not a trade secret. Perpetual obligations on business information that has a natural shelf life are disproportionate and may be unenforceable.
An NDA that is drafted so broadly that it prevents you from working in your field at all is likely to be treated as an unreasonable restraint of trade.
Your legal rights
In Canada, the tort of breach of confidence protects genuinely confidential information even without a contract. However, contractual NDAs can only go as far as protecting information that has the quality of confidence. Courts in common law provinces (and under Quebec civil law) will not enforce obligations over an employee's general skill, knowledge, and experience. Ontario and British Columbia courts have been particularly active in limiting overbroad confidentiality clauses in employment contexts. If you believe an NDA is unenforceable, obtaining legal advice before refusing to sign is strongly recommended.
Questions to ask before you sign
- 1What specific categories of information are defined as confidential?
- 2Does the definition include my general professional skills and experience?
- 3How long does the confidentiality obligation last?
- 4Does the NDA include an IP assignment clause covering personal projects?
- 5Are there carve-outs for information I already knew before joining or that becomes publicly known?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.