What to Do If Your Non-Disclosure Agreement in Utah is Breached?
Creating a confidentiality agreement in Utah, also called a non-disclosure agreement is an essential step that ensures the protection of your trade secrets and other proprietary bits of information from falling into the wrong hand or getting out in public. It ensures that all your employees with knowledge of most or all your trade secrets, potential investors, as well as business partners protect and restrict the access to the information by third parties. The non-disclosure agreement (NDA) will also ensure that the persons with access to your trade secrets do not use the information for individual or selfish interests unless permitted by the party that owns the rights to the information.
But even with all this power laid on the NDA, why are there many cases of breaches of contract? What makes NDAs less safe than they should be? Well, the problem lies in the enforcement of the NDA. That is, doing all that is necessary to protect your trade secrets. Unfortunately, enforcement is also expensive unlike the creation of the NDA which is as simple as downloading a free Utah non-disclosure agreement form and having it signed once you have indicated all the details of the proprietary information. For enforcement, you have to deal with litigation fees and the loss of time that is put into the litigation process.
While your NDA may have all its essential elements; the precise description of the confidential information, the obligations of the receiving party, exclusions, time period, and even remedies for a breach, you may have to deal with a case of misappropriation. The misappropriation of trade secrets could happen if a disgruntled employee takes their anger on you by leaking the trade secrets to the public. It could also happen if a competitor offers your employees a considerable amount of compensation if they share your trade secrets, or if your business partners use your trade secrets to start a competing company.
What to do in the event of misappropriation:
Investigate then gather evidence
If you suspect that the employee has breached the contract, you should not confront them immediately. First, investigate the NDA breach, gathering all the evidence of the breach in the process. This step will help you find evidence to help you seek retribution or prevent further loss of proprietary information. Some of the information you should gather include details on how the information was leaked, what the information was used for, and the parties involved in the breach.
Hold consultations with your attorney
With the help of your attorney, you will be able to determine if the evidence collected is substantial as you decide on the most appropriate course of action. This is where you send a demand letter (Cease and Desist Notice) to the guilty party. The letter is a reminder of the details of the NDA, a summary of collected proof, the demand of action, and a warning about what will happen if they do not comply with the conditions of the letter in a specific period.
Taking legal action
This is the next step to take if the demand letter does not work. With the help of your lawyer, you can make legal claims like misappropriation of trade secrets, copyright/patent infringement, breach of fiduciary duty, trespass, or conversion.
If all goes well, the court will rule in your favor, and it will order an injunction notice requiring the breaching party to stop the disclosure of the trade secrets. The court might also order the guilty party to pay a certain amount of money in damage (you and your lawyer have to determine the dollar value of the damages from the breach).
How to protect your trade secret from breaches
Vet the receiving party before disclosing your trade secrets: you should only share your trade secrets with people who are capable of and motivated to keep the information a secret.
Label the documents well: your free non-disclosure agreement in Utah must be labeled clearly to ensure that people who come across the information handle it well. Before the receiving party signs the NDA, label the trade secret they are to protect (product plans, prototypes, samples, software, vendor/ customer lists, drawings, marketing plans, etc. You could also add time stamps and electronic dates, taglines, digital certificates, embedded code, metadata or watermarks to label the information and to prove authorship.
Ensure that the receiving party protects your secrets: the most effective way of doing this is by highlighting the obligations of the receiving party. The said obligations include not disclosing the information to other parties and restricting access when dealing with third parties on the need to know basis. They are also obligated not to use the information for personal benefit unless they are permitted to do that by the disclosing party.
The parties must sign the NDA
Indicate the duration during which the receiving party is expected to protect the information. The amount of time indicated must be reasonable.
Other than the NDA, you could further restrict the use and access of your trade secrets around employees by using a non-compete agreement. It's more restrictive, as long as it strikes a balance between the protection of your business interests and trade secrets, and the right of the employee to find work in their trained field.
For enforcement, the non-compete should protect the interests of the business, as well as the goodwill or the investments you have put into training or educating the employee. The state laws also require consideration of the hardship the employee may face if the contract is enforced.
There should also be sufficient consideration for the validity of the non-compete. Initial or an offer of continued employment is sufficient consideration in Utah.
Are you looking for an NDA in Ogden, Moab, Salt Lake City, Park City, St. George, Logan, Provo, Sandy, Cedar City or any other city in Utah? Get started with our non-disclosure agreement forms downloadable at no cost.