What are trade secrets and will an NDA help?
Trade secrets are your top secret information assets that give your business a competitive advantage in the marketplace. Most state laws afford trade secret protection for critical information assets. The Defend Trade Secrets Act of 2016 (DTSA) (18 U.S.C. §§ 1831-1836) also creates a federal private cause of action for trade secret misappropriation. These laws will protect items like client lists, marketing plans, pricing and discount structures, business methods, production processes, recipes and chemical formulas and software algorithms and source code.
There, however, is a BIG caveat to protection. Under these trade secret laws, you most show you made reasonable efforts to keep your trade secrets an actual secret. If you disclose your trade secrets to another party without an NDA, this likely shows the opposite – you took no effort to keep your top-secret business information a secret. By executing an NDA, this helps you maximize your trade secret protection by reaffirming you made reasonable efforts to keep your information assets secret and confidential.
Main point. Make sure you have your employees, contractors, vendors, business associates and others execute an NDA before disclosing any trade secret or other valuable business information.
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