There are many types of contracts businesses may execute that include non-disclosure or confidentiality agreements. Frequently, businesses add restrictive covenants to employment contracts to prevent workers from putting the company at a disadvantage later.
Organizations may also include non-disclosure agreements in lease documents, vendor contracts and agreements between business partners. Any outside entity or employee who may gain access to trade secrets or information about how the company operates could eventually abuse that information.
Non-disclosure agreements help protect trade secrets and prevent unfair competition. However, a written agreement does not automatically ensure compliance with the contract. Businesses need to be ready to litigate in the event that an employee, vendor or service provider breaches a confidentiality or non-disclosure agreement.
Consider adding penalty clauses
A non-disclosure agreement on its own may not serve as an adequate deterrent to the release of protected information. Organizations often need to add penalty clauses that create specific consequences for a breach of the business’s non-disclosure agreement.
Frequently, there are financial penalties included in such clauses. The business may impose a fee based on the number of breaches that occur or on the duration of the breach. There could be a per diem fee in cases involving the publication of protected information on social media, for example. Those penalty clauses can motivate the other party to think twice before making inappropriate disclosures.
Preserve evidence of a breach as soon as possible
Particularly when a confidentiality issue involves social media, the party in breach of the agreement might try to cover their tracks retroactively. They may delete content they previously shared online or try to make it private.
Therefore, capturing digital evidence of inappropriate disclosures as soon as the company becomes aware is usually the best option available. The organization can refer to digital evidence when sending a cease and desist letter to the party that violated the non-disclosure agreement. The organization can also use that evidence when taking the matter to court.
Take legal action promptly
There are two main ways in which a successful lawsuit related to a non-disclosure agreement violation can help a company. The first is by assisting in the recovery of damages. The judge can award the plaintiff damages and can also enforce the financial consequences of a penalty clause.
The second is through a court order. Judges can issue injunctions forbidding the party in breach of the contract from continuing to disseminate information. Future violations might incur not just additional financial penalties but also put the risk of being in contempt of court because their actions violate a judge’s order.
Enforcing non-disclosure agreements is often necessary for the protection of a company’s intellectual property. Organizations must be ready to take contract breaches to court in scenarios where employees, vendors or other parties share private information that could significantly damage a company.
