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ARTICLE · 19 NOVEMBER 2021

Non-Disclosure Agreements And Trade Secrets: 12 Points To Consider

An NDA cannot expand what constitutes a trade secret because "a trade secret is defined by law … not by contract."

United StatesIntellectual Property

When businesses share their trade secrets or confidential information with employees or third parties (a franchisee, a joint venture partner, a potential buyer, etc.), they rely on trade secret law and on non-disclosure agreements (NDAs) for protection. How do NDAs affect potential trade secret claims and vice versa? What issues should businesses consider in drafting NDAs? Here are a dozen points to consider.

  1. An NDA cannot expand what constitutes a trade secret because "a trade secret is defined by law … not by contract." Capricorn Mgmt. Systems, Inc. v. Gov. Emps. Ins. Co., 2019 WL 5694256, at *17 (E.D.N.Y. 2019). Nonetheless, an NDA may provide broader protection than trade secret laws because it can cover proprietary and non-public information that does not meet the definition of a trade secret. "Trade secrets are defined by statute, but terms such as confidential and proprietary information are defined by the contract. Thus, a defendant may breach a contract

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