California Law on Non Disclosure Agreements

When it comes to doing business in California, non-disclosure agreements (NDAs) are a commonly used tool to protect proprietary information. But, did you know that the state has specific laws governing the use of these agreements? Here`s what you need to know about California law on non-disclosure agreements.

Definition of Non-Disclosure Agreement

A non-disclosure agreement, sometimes called a confidentiality agreement, is a contract between two or more parties that outlines what information is considered confidential and how that information should be used and protected.

California Law on NDAs

California law recognizes the importance of protecting trade secrets and confidential business information. As such, the state has specific laws related to NDAs.

California Civil Code Section 3426 defines a trade secret as “information… that derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use, and is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

To be considered enforceable under California law, NDAs must meet several criteria. First, the agreement must be in writing and signed by the party agreeing to be bound by the terms. Second, the confidential information being protected must meet the definition of a trade secret as outlined in Section 3426. And finally, the agreement must not place an unreasonable burden on the party agreeing to keep the information confidential.

Enforcement of NDAs

If an NDA is violated, the party whose confidential information was disclosed may take legal action to seek damages. However, California law places some limitations on the remedies available in these cases. Specifically, a court may not issue an injunction to prevent the use of general skills or knowledge acquired during employment.

Additionally, California law has some restrictions on the use of NDAs in specific situations. For example, NDAs cannot be used to prevent an employee from disclosing information related to sexual harassment or discrimination in the workplace.

Bottom Line

If you plan to use NDAs in your California-based business, it`s essential to ensure that your agreements meet the requirements laid out by state law. Failure to comply with these regulations could result in an unenforceable agreement, leaving your confidential information vulnerable to disclosure. Whether you`re the party disclosing information or the party receiving it, it`s always a good idea to consult with a lawyer to review any non-disclosure agreements before signing.