NDAs are fairly common in many business settings, as they offer one of the most surefire ways to protect trade secrets and other confidential information meant to be kept under wraps. Information commonly protected by NDAs might include schematics for a new product, client information, sales and marketing plans, or a unique manufacturing process.
In most cases, using a nondisclosure agreement means your secrets will stay underground. A breach of contract after a nondisclosure agreement has been established is a serious problem, and if you've suffered because of someone else's loose lips, there are a few legal remedies available to you.
Who spilled the beans? Moving forward after an NDA violation
If you find an associate is in violation of a nondisclosure agreement, or misappropriation, there are a handful of things you can do to protect yourself. In many cases, you can take legal actions against the theft of your confidential information or trade secrets.
Basically, misappropriation boils down to the acquisition or disclosure of confidential information by improper or unauthorized ways, including through theft, bribery, fraud or even hacking. Examples might include:
- A competing company offers an employee a higher salary or significant bonus in exchange for trade secrets or dirty laundry regarding their competitor.
- An employee passes along confidential information to a blogger or reporter who breaks the information to the media.
- A device prototype is stolen from a designer's home and falls into a competitors hands.
- A savvy hacker breaks into secured files and makes information public.
Many of the laws that protect trade secrets and confidential business information are based upon the Uniform Trade Secrets Act (UTSA), which sets forth a set concrete rules about confidential information and trade secrets. Information protected by these laws includes patterns, formulas, drawings, devices, programs and codes, processes and techniques. Some states and jurisdictions also include customer lists as trade secrets.
What to do if an NDA is violated?
Let's say you're a human resources professional at a large company. You come into work one morning and discover that a company server has been hacked, and you suspect that files containing confidential e-mails, customer databases and the code to a new computer program have been disturbed. An Information Technology contractor was recently fired under bad terms, and you suspect he's behind the breach. You know the former employee signed an NDA, and you might consider taking the following steps:
Review the original document. In many cases, the remedies for a breach of contract are written right into the contract itself. This is also true of nondisclosure agreements.
Investigate the theft or breach. Sometimes, this can be the most difficult step in pursuing a breach of NDA contract case. You know the information is out, but you'll need concrete evidence explaining how the information got out. Getting the right information is crucial. If you're not able to prove your case, you might be responsible for any legal fees racked up by both parties under provisions in the USTA rules and the NDA document.
When collecting information, consider looking for the means of misappropriation (how the secret got out), how the confidential knowledge has been used and the economic value of the information. Sometimes it's hard to put a dollar sign on facts, but it needs to be considered, especially if you think you're eligible for any damages.
Determine what legal claim needs to be made. In almost all cases involving a broken nondisclosure agreement, you'll be able to pursue damages stemming from a breach of contract. Other legal recourses might include misappropriation of trade secrets, copyright infringement, breach of fiduciary duty, conversion, trespass and patent infringement.
NDAs are an almost surefire way to confirm that confidential information stays protected in a variety of situations. It's important to be aware how these legal agreements work before signing or creating a document, as being well-informed can help you make the best legal decisions now and down the road. A breached nondisclosure agreement might be a headache, but it doesn't have to be an uphill battle. Knowing your rights, options and legal remedies can make dealing with breaches of contracts a little less painful.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.