Nondisclosure Agreements

The federal Defend Trade Secrets Act protects an individual who discloses a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a sealed court filing. The act requires a company to give notice of that immunity in any agreement with an employee, contractor or consultant that governs the use of trade secrets or other confidential information, if the agreement was signed or updated after the act became law. A cross-reference to a reporting policy given to the worker also satisfies the rule.

Without the notice, the company can't be awarded exemplary damages or attorney's fees under the act in a federal trade secret case against that person. Confidentiality terms in employment and independent contractor agreements should carry it too.

In a business sale, the NDA is usually the first document the buyer signs. It governs what the buyer learns in due diligence, and the letter of intent typically keeps it in force. An acquisition NDA adds terms a vendor NDA doesn't need:

• confidentiality for the fact that the business is for sale;
• no contact with the seller's employees, customers, suppliers or landlord without permission;
• no soliciting or hiring the seller's key employees for a period if the deal doesn't close;
• no obligation on either side to complete a deal until a purchase agreement is signed.