A Business-First Approach To The Practice Of Law

3 mistakes that could invalidate an NDA

| Jun 2, 2021 | Business Law |

Trade secret litigation often hinges on the strength of the business contracts that were put in place to protect the intellectual property. In many instances, the trade secret is shielded by a non-disclosure agreement (NDA). Unfortunately, it is not uncommon for organizations to over-step the protections that are possible in an NDA and include terms which may invalidate the agreement.

When drafting an NDA, common mistakes can include:

  • Using too broad a scope: One factor that can damage a restrictive covenant is failing to define a narrow scope. A company should be specific about what is considered confidential and non-confidential information. Specifically defining what information is protected forces an organization to create an NDA that is neither overly restrictive nor vague – both conditions which can invalidate the terms of the agreement.
  • Using too broad a definition: In an attempt to further protect themselves and their trade secrets, an organization might broadly define what is considered confidential. Some companies decide to clearly define information that is “confidential” versus “trade secrets” and narrowly define each term to make the NDA as clear as possible.
  • Using vague language: Any business contract should be written using succinct language and clear terminology. An organization must resist the urge to attempt to include as many definitions and riders as possible in an NDA. Rather, using clear language in a narrowly-defined contract might be easier to defend should a legal proceeding become necessary.

Since trade secrets are not concrete, tangible items, they must be defined and guarded by strong business contracts. When you are forced to fight to protect your trade secrets in court, it is wise to do so with a strong business litigation attorney by your side.