Inspired by this article in The Atlantic: https://www.theatlantic.com/ideas/archive/2019/03/trumps-use-ndas-unprecedented/583984/ (which I only skimmed) I was wondering what a typical “punishment” would be if someone were to break an NDA. How is that punishment determined? Is the “weight” of any specific disclosure a factor in the degree of punishment? If the agreement is determined to be broken by a single disclosure does it matter if said “discloser” just goes ahead and discloses every item of information they might possess?
I’m sorry, my NDA requires me not to answer your question.
I haven’t signed a ton of NDA’s, but the one’s I have signed have been written in a way that if I break them and the big wigs find out, I can loose my job.
NDAs are almost certainly civil agreements, and would be litigated in civil court. So we’re more than likely talking monetary penalties here. And since it’s civil court, the rules for guilt are different- it’s not all or nothing, like criminal court. Civil courts do stuff like find defendants 30% guilty of something, and base the penalties on that percentage of guilt.
From what I read I get the impression that Trump’s NDAs might not necessarily stand up in court terribly well because they sound too broad, and what’s more, he’d have to sue, or his descendants/estate would have to sue for breaking the NDA. So 15 years from now, when he’s almost certainly going to be dead, is Ivanka, Don Jr. or Eric going to be suing anyone for violating their NDA?
IANAL. I have signed NDAs on behalf of my company to do business with potential partner companies, but no dispute has ever arisen. I have never been asked to sign an NDA by an employer.
The “punishment” is determined in civil court. The law can allow a plaintiff to collect actual damages, and so the plaintiff would have to demonstrate that they were damaged by the disclosure in a such a way as to be expressed in dollars. In addition, a defendant can be assessed punitive damages by the court. I don’t think punitive damages would be common in NDA suits; I think it is typically reserved for behavior that the court finds especially reprehensible.
You could lose your job even without the NDA, if your employer finds you were acting against the interests of the company. I live in an employment-at-will state, where you can be fired without cause.
What’s interesting about the Trump NDAs is that they seem to be designed to prevent anything embarrassing from getting out, rather than harming a competitive position, which is the more common type of NDA. I think it would be challenging to get an award against someone who revealed something just because it was confidential even if the NDA says you won’t disclose it.
INAL but am the Technical expert for my business when it comes to Intellectual Property and NDAs. In some countries NDA violations may fall under criminal courts based on my understanding.
Also, if I recall correctly Trade Secret violations in the US, under NDA are dealt in Criminal courts especially if hostile countries are concerned.
Those prosecutions are based on classified information handling, not NDAs (which are strictly contracts between private parties).
I sign multiple NDAs per week. Usually the punishment is being sued for damages (or multiples thereof) due to lost business if a secret leaks out. The NDA usually covers not only the secrets being revealed/discussed (in our case for business/technology purposes) but also that either company is interested in such confidential information and that there is an agreement between the two parties. We/I can only reveal such information when compelled by a legal decision (or after 5 or 10 years).
Generally, the violator is responsible for paying damages. The violator may also receive an injunction preventing the violator from further spreading the confidential information or from disseminating additional confidential information.
I agree that NDA violations are generally civil matters. They are just violations of a contract. Most of the NDAs that I’ve seen provide for mandatory arbitration, however, foreclosing civil court actions.
We have NDAs with several of our clients. The NDA with one of them is very strict. Everyone within 250 miles or more know who is building on that site, but we can lose our contract by violating the NDA.
Here’s a cite from Germany to counter your claim : German Prosecutors Press Criminal Charges Against an Employee for Sending Trade Secrets to China
Classified information and export control information is another beast.
The most important part, from an IP perspective, on NDA is the ownership of the new jointly created IP. Say a blacksmith with his know how enters into a NDA with a cell phone maker and together they develop say a forged metal case for a cell phone. Now who owns the IP on the forged metal case ? In the US, it is better for one of the parties to own all IP (the other one can have the rights to practice though).
Cadence Design Systems, Inc. v. Avanti Corp is an example where things crossed a line from violating an NDA to being considered trade secret theft (among other charges), which was criminally prosecuted. I do not know where that line is drawn.
The line is drawn at where the trade secret is obtained. Gerald Hsu went to prison for obtaining Cadence code from others after he left, not for taking it with him. Avant! paid former Cadence employees specifically to provide them with Cadence’s source code. It would be a bit different if they simply hired them and they happened to use what they knew. For example, Mitsuru Igusa emailed a file to his private account on his last day at Cadence, then began a “consulting” business that worked exclusively for Avanti (and occasionally received unmarked envelopes from Avanti employees in parking lots).
I’ve done work as a ghostwriter which required me to sign an NDA, and it spells out specific financial penalties for violating the terms. It also states that an arbitrator would determine whether there was a violation. In my case, there was a list of violations and differing penalties for each one.