What happens if a partner or high-level employee violates an NDA?

On Behalf of | Sep 15, 2021 | Business Litigation |

A non-disclosure agreement (NDA), also known as confidentiality agreements, help better ensure the protection of business interests like intellectual property (IP), client information and strategic plans. They are often part of employment agreements. Whether a partner, high-level employee or a co-founder, a violation of an NDA is a big deal.

How do NDAs work?

Ideally, business owners will have the document drafted for their specific situation instead of using a boiler-plate fill-in-the-blank form. It should include many points specific to your business’ interests including a clear definition of confidential, the term of the agreement and the venue for dispute resolution in the event of a violation.

It is important to note that it is generally wise to also have a plan for intellectual property protection in collaboration with NDAs and to regularly reevaluate and update NDAs to better ensure they serve the intended purpose.

What happens if someone does not follow the terms of the NDA?

If a party violates the NDA, legal remedies can include:

  • Breach of contract suit. If a party to a contract does not meet the terms of that contract, the other party can hold them accountable through a breach of contract lawsuit. If the NDA is part of the employment contract, this is one legal avenue to hold the violating party accountable.
  • Breach of fiduciary duties. There are also instances when a partner or high-level employee has fiduciary duties to the business. Legal remedies are also available when these are violated.
  • IP litigation. It is also possible that an NDA violation cascades into violation of IP protections like patents, trademarks, and trade secrets.

These can result in an injunction and monetary damages. The injunction would keep the employee or partner from working with a competitor and the monetary damages would result in fees to help make up for the violation.