If the person or company you are suing acted in spite of or unwillingness or disregard for the probable violation (defined as “intentional and malicious”), the courts can inflict punitive damages in many states. These are damages that will be awarded to you to punish the culprit and set an example for other potential thieves of trade secrets. Confidentiality agreements (NSAs) are common complements to employment contracts designed to protect an employer`s trade secrets. Companies also conduct NDAS before negotiating with potential business partners. Although disputes can arise during the employment relationship, most controversies arise after the NDA parties separate and the former employee or business partner appears to have used trade secrets in a new position. The agreement of this type of clause is, at the best of times, an act of legal tightrope. In the common law tradition, it is illegal to agree on a “penalty” in a contract (i.e., “if you break that contract, you pay me $10 million, no matter what”). A penalty is not enforceable – and should not be included in any contract. Courts have a complex process for assessing the damages a party must pay for breach of contract. This is closely linked to the actual losses caused by the infringement and not to arbitrary amounts intended to punish non-compliance.

The exception is that it is possible to agree on “lump sum damages”, provided that this is a true forecast of the losses that a party will actually suffer in the event of an infringement. If the person who received the confidential information transmits or uses it in violation of an NDA, the owner of the company that disclosed the information may suffer indirect, special or consequential damages. For example, to attract a private equity investor or joint venture partner, the owner of a startup may need to pass on that investor`s trade secrets, ideas, intellectual property, and customer information. They then enter into a “standard NDA” to protect the business owner, which states that “the investor must keep information confidential”, but also that “neither party is liable for any specific, indirect or consequential damages suffered by the other parties”. . . .