When Are Non-Disclosure Agreements Unenforceable?

A non-disclosure agreement (NDA) is meant to protect confidential information from being released. If a person who signs an NDA discloses any information covered by the document, legal recourse is available. Texas law takes the issue of non-disclosure a step further. Even when an employee refuses to sign an NDA, they are still under a common law duty to not disclose their current or former employer’s trade secrets.

One note of interest about non-disclosure agreements is that they can be mutually beneficial. Suppose you are an employee who does not wish to have your own intellectual property used or revealed. In that case, you can also include that in an NDA. NDAs are contracts, and contracts are meant to be discussed and negotiated between parties.

If you have specific questions about non-disclosure agreements, you should consult with a San Antonio contract dispute attorney to look over any paperwork before signing a non-disclosure agreement.

There are three types of non-disclosure agreements. A unilateral NDA is when one party discloses confidential information, and the other party is expected to protect this information. The second is a bilateral NDA, where both parties share confidential information. It is agreed that neither party will disclose this information to anyone else. Lastly, a multilateral NDA deals with three or more parties exchanging confidential information. All parties must agree that the information shared is protected from further disclosure.

There are several reasons why an NDA might be unenforceable, however. If the NDA is too broad, the information under the NDA is not actually confidential, or if the agreement requires the employee to do something illegal. NDAs must be carefully crafted for proper enforcement. Your attorney will call attention to any unenforceable areas of your NDA, which is why it is so important to have a legal review.

Non-disclosure agreements versus non-compete agreements

The premise of an NDA is so that former employees or anyone with information regarding trade secrets does not release or share these secrets, particularly with another company. However, these agreements do not address “non-compete” orders. A non-compete order prohibits an employee from competing with their former company, such as by forming their own company within the same geographical location that offers the same services or products.

However, there is a gray area when a non-disclosure agreement also covers an employees’ ability to use any knowledge they learned within their time with the company. Texas courts do not allow a non-disclosure agreement to restrict a former employee from using general knowledge in their new employment. NDAs only apply to confidential company information. For instance, if the former employee is certified or licensed in a specific profession, no one can claim ownership over those skills learned or obtained through the certification or licensure process. The NDA would need to be specific to the intellectual property created or owned by the parties seeking the NDA.

Employers must prove that any non-disclosure and non-compete agreements are reasonable in scope if they wish to recover damages because of any alleged breach or violation of those agreements. Either agreement cannot be too broad or too stringent. There must be a middle ground so that the parties involved can enforce either agreement if the unthinkable happens.

Can I get out of a non-disclosure agreement?

You may have signed an NDA and are now looking for a way out. However, it is unlikely that you will be easily relieved of your duty not to disclose trade secrets. The primary way you can get out of non-disclosure is by waiting for the contract to expire. Waiting for an expiration date means you must keep secrets and confidential information for a certain period of time (which could mean years).

Another way to get out of a non-disclosure agreement is to look for a termination clause. The clause will explain what happens when one party ends the contract prematurely. There are some NDAs that do not allow early termination. If you do have a termination clause, you should look at the following:

• How termination will be communicated
• A notice period of termination
• What will happen after termination

Depending on what is stated within these clauses will determine if you can get out of an NDA. Your San Antonio non-disclosure agreement attorney can review your contract to ensure you are legally protected in any event. There may also be a “return of information” clause that requires one party to destroy any copies of the information they have and return the confidential information to the source. We can explain more about this in a consultation.

What goes into a non-disclosure agreement?

A non-disclosure agreement must include some key elements. The most important is the agreement stating exactly what information is confidential. The NDA will need to outline the boundaries related to this information. A description of the confidential information can be included without disclosing the specific details. This part is a bit tricky, but it can be done with the help of a skilled contract attorney.

The NDA must be clear on all parties and all information involved. It would be ideal to include a description of items that are not confidential and do not need to be protected. An NDA should also include a period in which the employee is required to protect this information. Lastly, the non-disclosure agreement will need to note any legal consequences of disclosing the confidential information. The agreement also outlines how attorneys’ fees will be addressed if there is a dispute.

How is an NDA enforced?

Parties can lose out on business opportunities when trade secrets and confidential information is leaked. If one party violates an NDA, the other party can pursue legal action. First, they can file a court order instructing the party to cease disclosing or using confidential information or trade secrets. Next, the party can seek damages for the harm caused by the release of this confidential information. Breach of contract, NDA, and non-compete agreements can get complicated quickly – ensure you have an advocate on your side.

Since many broad non-disclosure agreements are hard to enforce, you need a San Antonio contract dispute attorney to draft a non-disclosure that is clear and enforceable. If you are being sued for damages for breach of contract, you will need the full force of Grable Grimshaw PLLC to stand up for you. Call our office today at 210-963-5297, or complete our contact form to schedule an appointment.