NDA's are completely enforceable, just ask Apple. They win lawsuits all the time for dissemination of confidential information. The only thing illegal here is someone posting information that is confidential to the company and was sent in a confidential private communication and not shared with the public.
Common sense will tell you that the best way to keep a secret is to avoid sharing it. An NDA (non-disclosure agreement) works well to signal the risks associated with unauthorized disclosure. But once the information is leaked, the harm is done. An NDA is just a contract – not a magic tracker that will let you know when the other side breaches the confidentiality obligations and lets the cat out of the bag. One important requirement therefore is only to share confidential information where absolutely necessary.
If you do suspect that the confidentiality of your information has been breached, the NDA can be produced as evidence in a court so you will want to anticipate the situation where you must send an official letter. The first step is to be able to find the source of the leak. And the best way to find a person is to have as much information on that person as you can collect. The right time to collect that information is before you disclose anything of value. The details you need to collect depend on whether you are dealing with an individual or a company.
NDAs—like all contracts—do matter. Here’s why:
1) The impact of disclosure restrictions on the disclosing party.The decision whether or not to enter into an NDA and to thereafter disclose information under the protection of that NDA might in fact depend upon the existence of another NDA by which the disclosing party is already bound. For example, it is not uncommon for an NDA to permit disclosure of confidential information so long as that disclosure is being made pursuant to a written contract containing non-disclosure and non-use provisions that are substantially as (or no less) stringent than those included in that NDA.
2) Enforceability. Also, the NDA might actually be enforceable! If the receiving party discloses or uses confidential information in contravention of the NDA, then the disclosing party might in fact be able to obtain an injunction to at least stop the leak at its source. Or the disclosing party might be able to obtain damages. But many will argue (often with merit) that the damage has already been done and any remedy under the NDA will be insufficient.
3) An NDA is better than your ability to enforce it in court. So what the disclosing party really wants to do is prevent the disclosure or use of confidential information in the first place. Does an NDA accomplish that (or at least increase the chances that a recipient will not disclose or use information) more effectively than a hearty handshake? I think that it does. This is because an NDA, like all contracts, has value beyond a party’s ability to enforce it in court. In my contract-drafting presentations, I claim that, in the context of your contract counterparty deciding whether or not to breach a provision of a contract, that contract is as good as:
your counterparty’s perception that you will seek to and successfully enforce it in court; plus
your counterparty’s assessment of any damage to its reputation should you seek to and successfully enforce it in court; plus
any sense of moral obligation that your counterparty might have in performing its obligations under the contract.
Even in the big bad world of business, don’t discount this last point; there is no doubt a psychological component to entering into a written NDA. Studies have shown that people are more likely to adhere to beliefs and positions that they articulate in the written word than the spoken word (and certainly more so than if those beliefs or positions are kept sheltered in their minds).
In fact, in the next NDA that I draft, I’m thinking of emphasizing in bold font the sentence containing the core obligation:
The Receiving Party shall not directly or indirectly disclose and shall not directly or indirectly use any Confidential Information.
I would bet that, after coming face-to-face with the emphasized version of that sentence, the Receiving Party would at least have second thoughts about disclosing Confidential Information, even if it knew that the chances of it incurring damages or getting caught would be relatively low.
AI
