NDAs vs. Trade Secret Laws: Do You Really Need Both?
Businesses often rely on confidential information such as customer lists, pricing, formulas, software, and processes to stay competitive. NDAs and trade secret laws provide different forms of protection, and using both can strengthen safeguards for valuable business information. Business law attorneys can help clients evaluate which protections fit their business needs.
Indiana's trade secret law protects qualifying information that has economic value because it isn't generally known and is subject to reasonable efforts to maintain its secrecy. NDAs create contractual confidentiality obligations. At Smid Law, we help clients protect confidential information, develop appropriate agreements, and address related disputes.
Located in Fishers, Indiana, we represent clients in Indianapolis, Fishers, Carmel, Noblesville, Zionsville, and the surrounding areas of Indiana, including Hamilton County and Marion County. Contact our firm today to discuss your business's legal needs.
How NDAs Protect Confidential Information
An NDA is a contract that establishes confidentiality obligations between the parties. Depending on how it's written, the agreement can identify information that must remain confidential, explain permitted uses, and establish what happens if someone violates the agreement.
An NDA can be particularly useful when a business needs to share information with another person or company. For example, a business might provide confidential information to an employee, contractor, consultant, potential buyer, or business partner. An NDA can address several important areas:
Confidential information: The agreement can identify the categories of information that the recipient must protect.
Permitted use: The contract can establish how the recipient is allowed to use the information.
Disclosure restrictions: An NDA can limit whether and when confidential information can be shared with others.
Return or destruction: The agreement can address what happens to confidential materials when the relationship ends.
Contractual remedies: The agreement can establish contractual rights and remedies associated with a breach.
For businesses, carefully drafted NDAs can establish expectations before sensitive information changes hands. Our business law attorneys can review the agreement to determine whether its language addresses the information and relationships involved.
How Indiana Trade Secret Law Protects Businesses
An NDA and a trade secret claim aren't the same thing. Indiana's Uniform Trade Secrets Act provides a separate legal basis for addressing the misappropriation of information that qualifies as a trade secret.
Under Indiana law, information must meet specific requirements to qualify. It must derive actual or potential independent economic value from not being generally known or readily ascertainable through proper means, and it must be subject to reasonable efforts to maintain its secrecy.
This means calling information a "trade secret" isn't enough by itself. A business's conduct matters. If sensitive information is broadly available without meaningful safeguards, establishing trade secret protection can become more difficult. Businesses should consider measures such as:
Access controls: Limit sensitive information to people who need it for legitimate business purposes.
Confidentiality policies: Establish written procedures for handling proprietary information.
Security measures: Use appropriate physical and electronic safeguards.
Confidentiality agreements: Require appropriate personnel and third parties to protect sensitive information.
Information classification: Identify which materials contain confidential or proprietary information.
Our experienced business law attorneys can help clients assess whether their practices support trade secret protection and identify areas that require stronger safeguards. They can also review confidentiality policies and access controls to help protect sensitive information throughout the business.
Why Businesses Often Use Both
NDAs and trade secret laws provide different forms of protection that can work together. An NDA creates contractual confidentiality duties, while Indiana's trade secret law protects qualifying information and provides remedies for misappropriation.
Using both can strengthen a business's approach to protecting confidential information, particularly when sharing it with employees, contractors, or business partners. Business law attorneys can review your circumstances and determine which contractual and statutory protections apply.
How Lawyers Help When Information Is Misused
When a business suspects that confidential information has been disclosed or used improperly, acting promptly is important. Indiana law provides remedies for trade secret misappropriation, including injunctive relief and certain forms of monetary recovery.
Indiana's statute also establishes a three-year limitation period for a misappropriation action. The period begins when the misappropriation is discovered or when it reasonably should have been discovered. A business dealing with suspected misuse should consider several immediate steps:
Preserve evidence: Keep relevant emails, messages, documents, access records and other materials that could establish what happened.
Review agreements: Examine applicable NDAs, employment agreements and other contracts for confidentiality obligations.
Restrict access: Review whether additional access to sensitive information should be limited.
Identify the information: Determine what information was accessed, disclosed or used and whether it qualifies for trade secret protection.
Seek legal advice: Business law attorneys can evaluate potential contractual and trade secret claims and discuss available legal remedies.
Indiana law also permits recovery for actual loss and certain unjust enrichment resulting from misappropriation. When those measures can't be proven, the statute provides for a reasonable royalty in appropriate circumstances. Willful and malicious misappropriation can also support exemplary damages of up to twice the award for actual loss under the statute.
Attorney's fees aren't automatically available in every trade secret dispute. Indiana law permits an award of reasonable attorney's fees to a prevailing party in circumstances such as a bad-faith claim or willful and malicious misappropriation.
Protect Your Business With Help From Business Law Attorneys
An NDA can establish contractual confidentiality duties, while Indiana's trade secret law can provide statutory remedies for qualifying information. Using both can give businesses additional protection when confidential information is shared with employees, contractors, or business partners.
At Smid Law, our attorneys help clients review confidentiality agreements, identify information that requires protection, and address disputes involving proprietary business information. Our business law attorneys can also help clients assess whether their internal practices support trade secret protection.
Located in Fishers, Indiana, we represent clients in Indianapolis, Fishers, Carmel, Noblesville, Zionsville, and the surrounding areas of Indiana, including Hamilton County and Marion County. Connect with our firm to review your business's confidentiality protections and discuss the legal options available for safeguarding sensitive information.