CONFIDENTIALITY AND PROTECTION OF WHISTLE-BLOWERS: SAFEGUARDING ETHICAL DISCLOSURES BY - CHRISTINA ALEX

CONFIDENTIALITY AND PROTECTION OF WHISTLE-BLOWERS: SAFEGUARDING ETHICAL DISCLOSURES
 
AUTHORED BY - CHRISTINA ALEX
 
 
ABSTRACT
The exposure of illegal activities by whistle-blowers leads to enhanced organizational transparency and accountability and improves governance practices because of their essential role in disclosure. Whistleblowing process effectiveness mostly relies on the combination of protections and confidentiality which whistle-blowers receive. Confidentiality obligations are rooted in the doctrine of equity and ensure treating individuals who hold confidential information with the expected principle of good faith and fairness. The protection of the employer interests is determined by certain legal frameworks, such as contractual agreements, common law duties and doctrines of equity; however, the rights of the employees are equally important. However, these confidential information safeguards include employment contracts, non-disclosure agreements (NDAs) and post-employment restrictions. Yet the protection of confidentiality has to be balanced against the same need to encourage ethical disclosures of major incidents. Those being whistle-blowers, people who uncover corporate malfeasance, fraud, ethical misconduct, may rely on confidential information to back their claim. For this reason, the legal landscape must be such as to protect business interests but not overwhelm whistle-blowers with fear of unfair penalties for blowing the whistle in the public interest. There is a need to have robust whistle-blower protection laws to facilitate transparency with continued legitimate confidentiality obligations. This article looks into the protection of whistle-blowers' rights, specifically regarding the necessity of legal frameworks that allow ethical information to be disclosed without the risk of infringing trade secrets and other corporate information deemed sensitive.
 
INTRODUCTION
Covering under the Public Interest Disclosure Act 1998, whistle-blowers are crucial to exposing illegal activities, corporate misconduct and ethical violations. Improved governance practices are the result of their disclosures; organizations operate with integrity. However, it all depends a lot on the legal protections and assurance of confidentiality that it provides to the whistle-blowers. A duty of good faith and fairness exists in respect of those placed in possession of material made confidential by the obligation of confidence that arises in equity. These obligations, that is, protect employer interests though contractual agreements, and common law duties and doctrines of equity are critically balanced against the compelling demand to promote ethical disclosures.
 
In the world of intellectual property rights, confidentiality is an important ingredient that protects innovation. As such, it ensures that intruders from unauthorized use never violate mesmerizing ideas and delicate data. As such, firms can keep intact their business advantage and also make sure that they do not lose any other legal rights pertaining to inventions associated by maintaining absolute secrecy. This doctrine provides hide outs of the information, whether spoken, written or even shown, until it is lawful revealed to the world.
 
However, like any potential negative, the reverse side of keeping things secret, employment contracts, and non-disclosure agreements exist to prevent unauthorized use or disclosure of confidential information. However, whistle-blowers may be forced to use such information to reveal wrong doing. They may be fearful of retaliation, legal consequences, or career setbacks, if they lack adequate legal protection to inform the public about the test’s limitations.
 
The legal context of confidentiality and whistle-blower protections, stressing the basement for a harmonious blend of protecting business interests and allowing honest disclosures. It examines the possible structure of legal mechanisms that allow the protection of whistle-blowers from unfair punishment while protecting trade secrets and other corporate information. As such, it underscores the necessity of strong whistle-blower protection laws with a view to promoting transparency and safeguarding ethical accountability in an organization.
 
DOCTRINE OF CONFIDENTIALITY, A RULE OF EQUITY
In the intellectual property rights territory, safeguarding innovation requires confidentiality.  Proprietary business or enterprise knowledge is included under trade secrets.  A trade secret cannot concern any subject relating to public property or to information that was not actually secret.
 
In Saltman Engineering Co. Ltd v Campbell Engineering Co. Ltd, it was held that It is perfectly possible to have confidential document, be it a formula, (v) a plan, a sketch or something of that kind, which is the result of work done by the maker upon materials which may be available for the use of anybody...what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can 21 only be produced by somebody who goes through the same process[1].
 
Confidentiality is governed by a general equity law that information that was given in confidence must be kept private and may not be shared with other parties.  Based on equitable principles, this concept strives to be a strong force in the preservation of relationships built on trust and confidentiality in performance of services including these of employer, client and a professional or business partner.  Since, basically, equity remedies are the means by which confidentiality is maintained (i.e., a system of justice that denies enrichment without a corresponding detriment), it also means that confidentiality is not the same as other typical legislative protections such as trade secret legislation.Early authorities inform us that 'conscience,' 'reason,' and 'good faith' are the three main props of the 'conscience,' 'reason,' and the English Court of Chancery.
 
Continuing the wrangle on the legislation relating to separation of information secrecy seems to be another area of Indian equity that is guarded by courts.  The issue of information confidentiality has been covered by the well known TRIPS agreement of 1994 all around the world.  Also, it ensured the retention of confidential information of economic value.  The covenanting parties should take reasonable measures to protect trade secrets.
 
The foundation of the law of confidence is equity (the unenacted law); the social duty to keep the feeling known as confidence hidden rests on the social duty to act in good faith to the recipient of the trust.  This is therefore the reason why the jurisdiction for breach of confidence is rooted more on the basis of duty of good faith rather than property or contract.  Confidentiality remains a basic equitable concept resolving between the requirement of defending business and the interests of individuals on one hand, and more general issues involving justice and the public interest on the other.
 
CONFIDENTIAL INFORMATION
Confidential information is defined as any data or know-how that a disclosing party offers a receiving party, orally or in writing, that is meant to be private. The receiving party reasonably understands its confidential nature and any circumstances that would call for disclosure of said information. For example, confidential information may include financial projections, business forecasts, customer lists, employee information, sales, patents, and trade secrets. Confidential information plays an essential role in companies as it helps protect the company from losing any vital information necessary for the business's success[2].
 
A company often has to be different from its rivals by developing a unique selling proposition (USP) in order to succeed.  Additionally, because it is possible to replicate a rival’s unique selling proposition, it negates its advantage.  Therefore, most of the companies regard the knowledge that can enable a rival to replicate a good or service as a secret. This new complexity of private company transactions increased the scope of sensitive information.  Besides the lists of customers, the information was sought to be protected included trade secrets, tactics, designs and other intellectual properties.
 
There have been definitions of confidential information to define protected data in a general way.  In addition, they wanted to include labelled confidential content, as well as clearly sensitive, unlabelled information. The provisions evolved provide for listings of what qualifies as protected information such as supplier agreements, product designs and company strategies.  It gave insight into the wide perspective without getting into the details.
 
Over time, the ideas of what makes secret information also became necessary to ensure what needed to be safeguarded.  They wanted to protect all forms of private information that was revealed, whether specifically declared secret or quietly sensitive. In effect, confidential information clauses developed to provide expansive and flexible protections for any non-public data that offered competitive value. This comprehensive approach aimed to adapt protections to business needs as diverse as the information itself[3].
 
Because a business may have to work with an outside party, it can be hard to ensure that the contractor doesn't find out anything sensitive.  In the event that this is the case then the recruiting organisation often pens a non-disclosure agreement (NDA) for both situations.  Technically, these agreements do not prevent the contractor from disclosing any trade secrets, but they do entail penalties for taking action for that.  The sanctions are often quite severe, so those are deterrents.
 
CONFIDENTIAL OBLIGATION
This will imply or be written (depending on the employment contract) that the employee will always act in the employer’s best interest while contracted by them.   Also within the meaning of "duty of fidelity" is the protection of trade and commercial secrets guaranteed, namely as information which the employee develops during his labours, and as information sent to him.
In Hivac v Park Royal, the plaintiff company, which produced hearing aids of advanced design, secured an interim injunction to prevent a rival company from giving jobs to some of its technicians by way of "moonlighting" after hours. Since relief was apparently granted whether or not the technicians would be likely to impart confidential "know-how", the decision went a long way; but the plaintiff was constrained by war-time legislation from simply dismissing the technicians, and this condition made it a special case[4].
 
CONFIDENTIALITY AND NONDISCLOSURE AGREEMENT
Confidentiality agreements protect parties entering into commercial partnerships or transactions that require the parties to share private and sensitive information that otherwise would not be available to third parties.  Secret information is at the core of any confidentiality agreement and is the most popular type of confidentiality agreement.
 
For the agreement to protect from unintentional disclosure, the parties must identify what kind of information or information they want to protect and the scope of each party's nondisclosure responsibility. NDAs, commonly referred to as confidentiality agreements, are known to be used in corporate and legal fields to protect trade secrets, client lists, and financial information while confidentiality agreements, commonly referred to as NDAs, are typically created in personal and professional situations to safeguard sensitive information.
 
After sharing a continuous business relationship, parties frequently negotiate and include nondisclosure clauses in relevant transaction documents. Eventually these documents may become the stand-alone agreement, while for the rest of the contract life cycle they form a part of the broader contract management workflow.
 
CONCEPTUAL FRAMEWORK OF WHISTLE-BLOWER PROTECTION
Trade secrets are intellectual property rights on confidential information which may be sold or licensed[5].Trade secrets, since they are very important since they contribute to the economic worth of a company.  Firms' claim that whistleblowing that discloses trade secrets to others is associated with negative effects among these firms as failures, changes in market share, and harm to the brand.  Both corporate freedom and the public interest are provided by trade secrets and whistleblowing regulations.  The legal system often protects whistle-blowers from reprisals when whistle-blowers reveal valid and legal wrongdoing.
 
THE LEGAL CONFLICT: WHEN WHISTLEBLOWING INVOLVES TRADE SECRETS
Whether, in particular, whistle-blower protection should supersede trade secret protection is one of the primary issues of the legal dilemma between trade secret protection and whistleblowing.  According to companies, preserving trade secrets is essential to economic growth and competitiveness because unauthorised disclosures may be costly and reputational damage.  On the other side, whistle-blowers claim that trade secrecy obligations ought to give way to corporate misconduct. Each jurisdiction acts differently when conflict between them occurs.  In the case of United States ex rel. Cafasso v. General Dynamics C4 Systems, Inc.[6], the court held that extensive disclosure of trade secrets that was not necessary to report fraud was not protected.
 
India does not have a unique trade secret law and the right to protection is largely implied through contract law and confidentiality agreements. The Companies Act, 2013 (Section 177) offers whistle-blower protection in some cases, but the immunity is not made available in trade secret case. Generally, in India, corporate confidentiality will prevail in the courts, but only if, in a given case, there is a sufficient public interest to justify disclosing. This problem remains as finding the balance between protections for the corporation and preserving ethical whistleblowing — allowing the uncovering of wrongdoing with reduced risk to those who come forward.
 
ETHICAL DILEMMAS IN WHISTLEBLOWING AND TRADE SECRET PROTECTION
The ethical conflict presented in whistleblowing that pertains to trade secrets is the conflict between the duty to disclose corporate misconduct and the duty to protect proprietary business information. Without a doubt, it is critical to diagnose and expose corruption, fraud, or any other form of unethical behaviour that exists in order to promote transparency and accountability, but businesses also have a vested interest in protecting their confidential data, such as trade secrets, business strategies, and innovative processes, among others. The problem lies when whistle-blowers who expose unethical conduct might expose confidential business issues that could lead to a company's competitive disadvantage or financial ruin. 
 
Employment relationships require a fundamental obligation of confidentiality in order to protect an organization's proprietary knowledge that it has developed. Unauthorized disclosures of trade secrets are an unfair method of competition that takes businesses away from their market position, weakens investor confidence by reducing expected income, and represents an investment in research, development, and innovation that is worth considerable resources. From this standpoint, keeping confidentiality is not only a legal duty but also an ethical requirement to sustain economic growth and innovation. But on the other hand, too much corporate secrecy can also be a way for corporations to censor the disclosures of whistle-blowers under threat of employer retaliation, either legal or financial. 
 
On the other side, whistle-blower protections facilitate ethical disclosures by protecting individuals who expose wrongdoing in a corporation from retaliation. It is commonplace for employees to find themselves in moral dilemmas when they are faced with unethical practices, and are forced to decide between remaining silent in order to protect their career or speaking out by reporting misconduct, regardless of how much personal stakes there might be. In this situation, whistle-blower law and legal protection are key to building an accountable culture. While these protections can also be abused, those who do so are not necessarily led by an ethical duty to make the information public, but probably to achieve personal advantage, or to settle a dispute or disadvantage a competitor. 
 
In light of the competing ethical concerns, such as requiring whistle-blowers to weigh their need to act versus their desire to protect their employers’ trade secrets, it is necessary to adhere to key ethical principles in order to strike a balance between whistleblowing and trade secret protection. Second, wherever possible whistle-blowers must try to raise their concerns internally before going down the external route. Internal means include company compliance programs and ethics committees to resolve grievances without blowing the cover of trade secrets. When internal reporting is either unsafe or ineffective, external disclosures should be carefully considered, with only necessary information to expose wrongdoing being reported, while irrelevant trade secrets are protected.  
 
Next is that whistle-blowers should not act outside the boundaries of ethical and legal rules. It may help to consult legal experts to minimize legal risks and to ensure that the report is in compliance with whistle-blower protection laws before disclosing the information. Protected disclosures often represent the only practical avenue by which to expose misconduct by means other than breaching confidentiality obligations, and many jurisdictions provide legal avenues for protected disclosures. However, as such, the failure to adhere to these guidelines is sure to attract severe consequences such as lawsuits, financial liabilities and professional reputation. 
 
It is also corporations’ responsibility to establish ethical workplace cultures that promote responsible whistleblowing. Clear policies should be implemented in companies that distinguish between valid whistleblowing and misuse of confidential information. Therefore, ethical corporate governance ought to strike the right balance in protecting trade secrets on one hand and enabling employees to call out unethical behaviour without fear of being retaliated against. 
 
Finally, the ethical issues related to whistleblowing and trade secret protection overlap in that certain cases involve the disclosure of both trade secrets as well as exposing illegal or improper behaviour, each of which raise ethical considerations. Businesses need to protect their proprietary information but should not use disclosure confidentiality as a shield to hide ethical disclosures. Similarly, whistle-blowers should behave responsibly such that their disclosures are in the interest of the public, rather than their personal motives. Whistleblowing to be a tool of justice on the one hand, while on the other protecting integrity of trade secret protection, requires a well regulated legal framework that embraces ethical corporate practices.
 
CHALLENGES IN BALANCING TRADE SECRET PROTECTION AND WHISTLE-BLOWER RIGHTS
One of the major problems in whistle-blower protection is to reconcile the right to reveal the wrongdoings with protecting trade secrets and confidential business information. The unauthorized disclosure of proprietary information compromises companies’ competitive edge, causing financial consequences to these companies, and preventing them from getting the maximum innovation. However, whistle-blowers argue that corporate confidentiality should not be used to hide fraud, corruption or public harm.
 
Others can potentially misuse whistle-blower protections for matters pertaining to personal grievances, competitive advantage and financial gain by employees. False or misleading allegations tend to ruin a company’s reputation and cause legal dispute. Therefore, it is necessary for whistle-blower protection legislation to incorporate language that provides protection against retaliation for the true whistle-blowers while also protecting against malicious disclosures.
 
The establishment of clear legal framework, which makes clear difference between illegal leaking of trade secrets and legitimate whistleblowing, can constitute a potential solution. This can be done under the umbrella of legal principle which limits whistle-blower disclosure to information that is directly related to the misconduct while the confidential information unrelated to the misconduct remains protected. Furthermore, companies ought to have sound internal reporting mechanisms through which their employees can lodge their concerns within the organization prior to resorting to external disclosures.
 
CONCLUSION
The fundamental element of encouraging transparency, accountability, and ethical governance in both corporate and public sectors is confidentiality and whistle-blower protection. At the same time, businesses need to guard the trade secrets and proprietary information especially, but these protections should not be used to suppress ethical disclosures that are in the public interest. To be able to achieve such informed decisions, governments and organizations have to put in place very strong legal and policy frameworks that enable responsible whistleblowing, but also provide protection for whistle-blowers from repercussions.
 
Balancing trade secret protection against ethical disclosures is crucial to making sure that misconduct is met without constricting the drive towards business innovation. Stakeholders can instigate an atmosphere in which whistleblowing becomes a strong instrument of justice and service by increasing lawful protections, orienting such kind of corporate culture, and making safety reporting mechanisms accessible.
 
Ethical disclosures are important to protect corporate interests, so, confidentiality and whistle-blower protection are crucial to such disclosures being safe. Mitigating between these two conflicting matters is very important with the end goal of promoting clearness, uprightness, and duty in associations. However, ethical disclosure will be defined by legal frameworks such as the Public Interest Disclosure Act 1998, equitable principles of confidentiality, and trade secret protections. 
 
Yet, organizations should not abuse confidentiality agreements and trade secret protections as means to curb whistle-blowers. While whistle-blowers must act responsibly and not disclose things that would be in the interest of private gain and not the public, but, at the same time, having mechanisms that allow whistle-blowers to bring these activities to light, so that they can be dealt with, is important. To distinguish genuine leaks from unauthorized disclosures that are bad for business, there needs to be a well defined legal structure. 
 
In the end, there exists a reasonable amount of whistle-blowers protection, ethical corporate governance and strong confidentiality balance protecting the corporate secrecy, yet promoting transparency. To maintain this equilibrium, there should be encouraging of internal reporting mechanisms, creating a culture of accountability, and enforcing of legal safeguards which prevent retaliation. The only way societies can protect ethical whistle-blowers and preserve legitimate business interests is through such measures so that organizations operate with integrity and benefit the wider good.

[1] (1948) 65 RPC 203, C.A. at p.211.
[3] Robin AI, Available at: https://www.robinai.com/contract-clause-lists/confidential-information-definition , Last Modified at: 24.03.2025
[4] [1946] 1 All E.R. 350 CA
[5] World Intellectual Property Rights(WIPO), Available at: https://www.wipo.int/en/web/trade-secrets , Last Modified at 26.03.2025
[6] 637 F.3d 1047, 1062 (9th Cir. 2011)