The below article analyzes the applicable laws, consequences, and questions relating to breaches of confidentiality in cooperation; it also provides guidance on remedies and relevant legal consultancy services.
The below article analyzes the applicable laws, consequences, and questions relating to breaches of confidentiality in cooperation; it also provides guidance on remedies and relevant legal consultancy services.
I. Current situation of breaches of confidentiality in cooperation
In the context of the digital economy and globalization, cooperation between individuals, organizations, and enterprises has become increasingly extensive, leading to the need for sharing sensitive information and data. However, in practice, breaches of confidentiality in cooperation remain common and are growing more complex, manifested in several aspects:
- Information leakage from partners: In many cases, a partner in a contract or cooperative project has deliberately or unintentionally disclosed trade secrets, customer data, or financial information, thereby causing damage to the other party. For example, a technology company’s source code or product strategy being revealed by its partner.
- Misuse of information for unfair competition: After cooperation, certain enterprises have exploited confidential information to develop competing products or services on their own, or transferred such information to third parties for illicit gain.
- Lack of monitoring mechanisms and confidentiality commitments: Many cooperation agreements only vaguely refer to confidentiality obligations without clearly stipulating scope, duration, or sanctions for breach. This makes it difficult to determine liability and compensation in the disputes.
- Technological risks increasing violations: Online collaboration, remote working, and data sharing via digital platforms facilitate information exchange but also increase risks of intrusion, theft, or unauthorized disclosure.
Typical cases include:
- Domestic F&B enterprises whose secret recipes are disclosed to another market by foreign partners.
- Technology firms are attacked by hackers exploiting vulnerabilities in a partner’s weak storage security system.
Such circumstances show that breaches of confidentiality in cooperation not only cause financial losses and diminish competitive advantages but also severely damage corporate reputation and brand value. These risks highlight the need to strengthen the legal framework and raise awareness among cooperating parties regarding compliance with confidentiality obligations.
II. Legal provisions on breaches of confidentiality in cooperation
As business cooperation expands, the exchange and sharing of confidential information among parties is inevitable. However, it also increases the risk of unauthorized disclosure, misuse, or leakage of information, directly impacting the rights, reputation, and development strategies of enterprises. Vietnamese law provides specific regulations governing confidentiality breaches in cooperation, including definitions, elements, and applicable sanctions.
1. What constitutes a breach of confidentiality in cooperation?
A breach of confidentiality in cooperation refers to the unauthorized disclosure, use, transfer, or exploitation of confidential information, data, or trade secrets that the parties have contractually undertaken to protect or that the law prohibits from disclosure. Such acts may be intentional or unintentional but nonetheless result in damage to the lawful rights and interests of the information provider.
2. What acts are considered breaches of confidentiality in cooperation?
Typical breaches of confidentiality in cooperation are deemed infringements of trade secrets pursuant to Clause 1, Article 127 of the Law on Intellectual Property 2005 (as amended in 2009, 2019, 2022), including:
- Accessing or collecting trade secret information by defeating protective measures of the lawful controller;
- Disclosing or using trade secret information without the consent of the owner;
- Breaching confidentiality contracts, or committing fraud, inducement, coercion, bribery, or abuse of trust to access, collect, or disclose trade secrets;
- Accessing or collecting trade secret information of applicant in licensing or product registration procedures by defeating protective measures of competent authorities;
- Using or disclosing trade secrets when one knew or ought to have known that the trade secrets were obtained unlawfully by others;
- Failing to perform confidentiality obligations prescribed in Article 128 of the Law on Intellectual Property 2005.
In addition, breaches of business confidential information are considered unfair competition practices prohibited under Clause 1, Article 45 of the Law on Competition 2018, including:
- Accessing or collecting business confidential information by defeating protective measures of the owner;
- Disclosing or using business confidential information without the owner’s permission.
3. Administrative sanctions applicable to breaches of confidentiality in cooperation
Administrative sanctions for breaches of confidentiality in cooperation are provided in Article 16 of Decree No. 75/2019/ND-CP, as follows:
- Monetary fines: From 200,000,000 VND to 300,000,000 VND for:
+ Accessing or collecting business confidential information by defeating protective measures of the owner;
+ Disclosing or using business confidential information without the owner’s consent. - Additional sanctions:
+ Confiscation of exhibits or means used for committing the violation;
+ Confiscation of illicit profits gained from the violation.
III. Questions regarding breaches of confidentiality in cooperation
In practice, when confidentiality breaches occur, parties often face concerns about contract validity, scope of liability, and evidentiary requirements to safeguard their rights. Below are answers to common questions:
1. Can a breach of confidentiality in cooperation lead to contract termination?
According to Article 428 of the Civil Code 2015, a party may unilaterally terminate contract performance if the other party commits a material breach. Where a breach of confidentiality results in substantial damage, undermines the purpose of cooperation, or causes serious loss, the injured party may request termination of the contract.
2. Can a breach of confidentiality affect other obligations under the contract?
Pursuant to the Civil Code 2015 (Articles 351, 361) and the Law on Commerce 2005 (Articles 303, 310, 312), breach of confidentiality obligations may constitute breach of contract, giving rise to liability for damages and potentially leading to suspension or termination if confidentiality is a fundamental obligation. Such breaches may also violate duties of honesty, non-competition, and mutual benefit, triggering contractual sanctions and compensation.
3. What evidence should the injured party collect when a breach of confidentiality occurs?
The injured party should proactively collect and preserve:
- The cooperation agreement and related confidentiality clauses;
- Emails, messages, or documents evidencing unauthorized disclosure or use of information;
- Electronic data (system logs, access records) showing leakage;
- Invoices, financial reports, or records substantiating actual damages (e.g., lost clients, decreased revenue);
- Witness statements or third-party confirmations.
4. Can breaches of confidentiality in cooperation be subject to criminal liability?
In particularly serious cases. For example:
- Article 288 of the Penal Code 2015 (amended 2017): Offense of illegally providing or using information on computer networks or telecommunications networks;
- Article 159 of the Penal Code 2015 (amended 2017): Offense of infringing upon secrecy or safety of correspondence, telephone, telegraph, or other forms of private information exchange.
Thus, beyond administrative sanctions, certain breaches of confidentiality may lead to criminal prosecution.
5. If confidentiality is breached due to a third party, who takes liability?
The general principle is that the party contractually bound to confidentiality is responsible to its counterparty, unless the contract provides exemption or the party proves force majeure under Article 351 of the Civil Code 2015.
Then, such a party may seek indemnification from the third party under another legal relationship (e.g., confidentiality service contract, IT service contract). Allocation of liability may differ if expressly agreed upon in the cooperation contract.
IV. Legal consultancy services on breaches of confidentiality in cooperation
In practice, to minimize risks and protect lawful interests, individuals, organizations, and enterprises should seek professional legal consultancy services in cases such as:
- Drafting, reviewing, and negotiating confidentiality clauses in cooperation agreements, labor contracts, and service agreements;
- Advising on legal-compliant confidentiality measures (technical, administrative, contractual);
- Representing clients in dispute resolution before courts or arbitral tribunals in confidentiality breach cases;
- Assisting in evidence collection and legalization to prove breaches;
- Advising and providing preventive solutions against confidentiality breaches, especially in international cooperation or digital platform cooperation.
Should you have any inquiries relating to breaches of confidentiality in cooperation or other legal matters, please contact NPLaw for direct consultancy and guidance.
