Ontario Civil

Commercial Law


Trade secrets and confidential information

Exposure through work as consultant not sufficient to constitute actual notice

Corporate plaintiff commenced action claiming defendants improperly used confidential and proprietary information that was disclosed to them in 2002. Plaintiff filed its action on September 9, 2011 and defendants moved under R. 20 of Rules of Civil Procedure to strike claim on grounds that it was statute-barred by Limitations Act. Defendants also sought orders declaring evidence from examination for discovery of principal of plaintiff would be binding for all purposes, irrespective of source of his knowledge and that it could be used for all purposes against plaintiff since principal was also principal for company M who associated with plaintiff and on behalf of M, provided consulting services to defendants and had access to information relevant to discoverability of plaintiff’s claim. Motion judge granted partial summary judgment dismissing defendants limitations defence, and adjourned portion of motion related to principal’s examination for discovery. Defendants appealed. Appeal dismissed. Motion judge found that even if no distinction were made between principal’s knowledge acquired through M and plaintiff, plaintiff’s obligation to exercise due diligence in investigation of its potential claim against defendants was not triggered before April, 2009. Further, to extent principal was exposed to defendants affairs through his work as consultant, it was not sufficient to constitute actual notice of claim against defendants or to trigger obligation to exercise due diligence in investigation of potential claim against defendants. There was evidentiary basis for findings and not appellate court’s function to reweigh evidence. Submission that motion judge excused plaintiff from making earlier inquiries that it refrained from making order to avoid damaging is business prospects was based on isolated sentences of motion judge’s reasons taken out of context. Considering all circumstances, motion judge had to consider particular position of principal who was subject to non-disclosure agreement while working as consultant to the defendants and other clients. Record contained principal’s explanations why it was not until defendants returned plaintiff’s two demo servers that he discovered software that was potentially based on plaintiff’s proprietary specifications and then he began technical inquiry in breach of his confidentiality agreement. Record supported motion judge’s finding that plaintiff exercising reasonable diligence, could not have discovered its claim until September 11, 2009.
Etaliq Inc. v. Cisco Systems Inc. (2017), 2017 CarswellOnt 4550, 2017 ONCA 271, R.G. Juriansz J.A., P. Lauwers J.A., and C.W. Hourigan J.A. (Ont. C.A.); affirmed (2016), 2016 CarswellOnt 13159, 2016 ONSC 5109, Sylvia Corthorn J. (Ont. S.C.J.).


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