Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m M A Y 2 0 1 7 61 it's a two-paragraph clause in the big binder, and no one seriously looked at." Sanjay Goorachurn, a partner in Smart & Biggar/Fetherstonhaugh in Montreal on the transactional side, has worked in business and cross-border deals on both sides of the Canada-U.S. border and says the "emphasis of the deals is on the more easily understood issues . . . "There's so much know-how required to make products work," Goorachurn says. "A significant investment is made, and there needs to be a corresponding diligence." Citing the Facebook case, he says senior managers need to conduct this diligence. "What did [the target firm] do, who did they collaborate with and should that raise a flag? That's the due diligence that's required," he says. In the Facebook damage award, the court allocated roughly $200 million out of a $500-million damage award for breaches of a non-disclosure agreement that was pre-acquisition, he says. "There's a close relationship between litigation and transaction. If I buy this company, what would be the risk of a solid claim against the target company if we did the deal? Factor the poten- tial litigation risk into evaluation of deal," Goorachurn advises. Otherwise, he says, "It's like buying a house without knowing its state." Crossing borders There are variations on how confiden- tial information is maintained in dif- ferent countries, says Kratz. And more established regimes for protecting trade secrets exist in countries such as the United States, where then U.S. presi- dent Barack Obama signed into law the Defend Trade Secrets Act in May 2016. Companies must pay attention to the ownership and movement of confi- dential information across borders, he says, noting that in Canada the sharing of information in certain areas is pro- hibited without a permit: for example, in the area of encryption technology. Companies need to know whether they can lawfully share information depend- ing on the jurisdiction. "We generally rely on common law rights to provide regulation of trade secret obligations. Unlike the U.S., we don't have a tort of violation of trade secrets. There has been law reform pro- posed for Canada," which to date does not have a separate tort but rather a common-law right under equity for breach of confidence, says Kratz. A new regime Do Canada's trade secrets laws need to be strengthened? Guay notes that data protection is stronger in Europe, where it goes beyond copyright protection, and there is nothing comparable in Canada. Changes are "long overdue," Goora- churn says. "A company spends a lot of money on developing manufacturing processes or on how to make their factory work better," he says. "They spend a lot of resources on R&D. The patent does help once the product leaves the factory. But for all the investment by the company, I think there should be more legal support for someone who has to defend that investment." Innovative businesses choose Smart & Biggar — the recognized leader in intellectual property O t t a w a / To r o n t o / M o n t r e a l / V a n c o u v e r / C a l g a r y U N PA R A L L E L E D I P Canada's Intellectual Property Litigation Firm of the Year Benchmark Canada Awards 2017 Canadian Trademark Contentious Firm of the Year Award Managing Intellectual Property's North America Awards in 2017 Band 1 for Intellectual Property Law in Canada Chambers & Partners – The World's Leading Lawyers for 2017 edition Top Tier for Intellectual Property in Canada The Legal 500 Canada 2017 S M A R T- B I G G A R . C A Untitled-6 1 2017-04-13 3:43 PM

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