posted byBagasian LawApril 21, 2021
Nondisclosure and trade secret violations can greatly harm a business.
They are put in place to protect the value of a business by ensuring competitors do not develop the same products, services, or processes.
However, these agreements are sometimes violated, causing a business to endure significant financial losses.
In this article, we are going to be discussing:
A nondisclosure agreement is a legally binding contract between a party that is sharing information and the party receiving that information.
This agreement states that the information will not be shared with unauthorized individuals or parties.
Once the nondisclosure agreement has been signed, it is illegal for confidential information to be shared.
Additionally, the party entering into the nondisclosure agreement cannot use the information in any way not approved by the owner, such as modifying it or using it for personal gain.
Nondisclosure agreements are common in the workplace, often created by the owner or founder of a company and signed by partners or employees.
There are many reasons a nondisclosure agreement is created, so let us discuss a few common scenarios.
First, non-disclosure agreements may be used to protect business records and plans.
Second, a business may want to protect its sales leads and client details. For example, once signing a non-disclosure agreement, an employee cannot market the same services to the same clients independently of the company.
Third, a non-disclosure agreement protects trade secrets, which we will discuss in further detail later in the article.
A non-disclosure agreement is usually only valid for a certain period of time, while the information being protected is useful or relevant. However, trade secrets are generally an exception to this rule, lasting indefinitely.
If your nondisclosure agreement has been violated, it is important to take legal action to protect your business.
First, contact your business lawyer to understand the best way to proceed and to ensure your business is protected throughout the process as a nondisclosure agreement is a legally binding document.
Next, gather evidence that your nondisclosure agreement has been violated, like a trade secret misappropriation, for example.
Once the evidence has been gathered, a lawyer will begin litigating the case on the basis that the NDA has been breached. However, further litigation will be determined by the type of violation.
Let us discuss some of the most common types.
One of the most common types of NDA violation is copyright infringement, which is when materials that have been protected under copyright law are shared or used.
Another common type of NDA violation is patent infringement, which is when a patented invention is used without permission.
Finally, trade secret violations, which we will discuss in the next two sections, are considered an NDA violation.
Before we can define a trade secret violation, let’s define what a trade secret is.
A trade secret is a form of intellectual property that is vital to the success of a company, such as a recipe or a process.
The purpose of a trade secret is to keep competitors from replicating the product a business is selling.
Unlike a patent, which is used to protect new innovations in the market, trade secrets protect valuable information.
A trade secret is different from a patent for a number of reasons.
First, once the patent is granted, that information is released to the public but protected under the patent. On the other hand, a trade secret remains a secret.
Second, a patent only protects a certain invention for about 20 years, while a trade secret is essentially protected forever.
Therefore, a trade secret violation is when someone's private information is stolen or shared.
To better understand this concept, let’s discuss an example of a trade secret violation.
An employee who is privy to a trade secret and then switches jobs and shares that confidential information with his or her new employer is a trade secret violation.
Since trade secret violations have legal consequences, a business owner can sue the violator for the losses and damages that occurred as a result of the violation.
For example, if a trade secret is shared and the business owner loses a share of their market to a competitor, the violator is responsible for the economic losses that are a consequence of this market loss.
For a trade secret violation to be ligated in court, the secret must be providing the business a competitive advantage.
In other words, the information kept confidential is highly valuable and its disclosure causes the company economic damages.
Additionally, for a trade secret lawsuit to hold up in court it must be proven that the defendant acquired the information illegally or shared the information illegally.
Since every state has laws against disclosing trade secrets under the Uniform Trade Secrets Act, it is necessary to hire a lawyer to present your case in court.
By hiring a lawyer, you will be able to sue the defendant for the economic losses due to the trade secret being disclosed.
Reaching out to a lawyer when faced with a nondisclosure or trade secret violation ensures that your business is protected and that the party who violated that contract must compensate your business for the losses that resulted from the violation.
An experienced business attorney will help you navigate nondisclosure agreements, whether you need to develop one for your business or you are the victim of a trade secret violation.
Los Angeles-based lawyer, Alina Bagasian, will provide the best legal services for your business. Possessing an understanding of corporate and commercial business, Alina Bagasian is ready to represent your business and provide you with excellent legal advice.
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