What happens if you break a non-disclosure agreement? If breaking a non-disclosure agreement is proven, there can be severe consequences in some cases. This may include either civil penalties or even criminal penalties. Either of these could significantly impact your life, including risking your financial future and freedom. A lawyer can help you in multiple ways. They can help you understand an NDA’s components and how they work and deal with any consequences for breaking one. So, what happens if you break an NDA?
Civil Penalties for Violating an NDA
The first consequence of breaking a non-disclosure agreement is civil penalties. Businesses commonly use NDAs to secure trade secrets or other private information. The terms included in the NDA agreement will correspond with the breach of the NDA. Generally speaking, this means that the information included in the NDA has either been revealed or misappropriated. Some types of information that are often protected in a non-disclosure agreement include:
- Information about clients
- Product designs
- Unique manufacturing processes
- Marketing strategies
Civil penalties for breaking the terms of the NDA can include monetary damages or an injunction to prevent further violations of the agreement. The company or person that the NDA violation has damaged has the ability to seek legal remedy in a civil court. This could include being sued for breach of contract, but also potentially for the following, depending on the circumstances:
- Copyright infringement
- Breach of fiduciary responsibility
- Various types of violations of intellectual property (IP) law, including drawings, computer codes and programs, formulas, and business techniques
The types of financial compensation that a person or company may receive in a lawsuit due to breaking a non-disclosure agreement include:
- Punitive damages (detailed in the agreement terms)
- Recovery for business interruptions or loss of business
- Funds for payment of legal fees and other costs associated with a lawsuit associated with an NDA violation
Civil penalties for breaking an NDA can easily amount to thousands of dollars. Depending on the severity of the breach, the two parties may be able to come to an understanding through other conflict resolution strategies instead of going to court.
Criminal Penalties for Violating an NDA
What happens if you violate a non-disclosure agreement? The second consequence of breaking a non-disclosure agreement is criminal penalties. Depending on the circumstances, the consequences could equate to significant incarceration time. This NDA violation penalty would be life-changing, causing effects across various areas of a person’s life long into the future. However, it is important to know that criminal charges only occur in some cases, particularly where classified or confidential information is involved. An example of this would be the theft of trade secrets. If you believe there has been any type of breach of an NDA that you signed, consult with an attorney. Can you break an NDA in court? That depends. If a company was found guilty of a crime, it would probably be looked upon favorably by the courts.
Loss of Reputation and Business Relationships
Careers can also be affected due to violations of NDAs. The third consequence of breaking a non-disclosure agreement is the loss of reputation and business relationships. This can make it very difficult for you to succeed in your field of choice. If proven, breaking NDA consequences include potential damage to your reputation and loss of credibility in your industry. This can result in the loss of current business relationships and potential new ones. Opportunities like new roles or contract work can also be lost. When you are considering what happens if you violate an NDA, know that it could have wide-ranging consequences.
Cost of Litigation
The fourth consequence of breaking a non-disclosure agreement is the cost of litigation. If a party who has been damaged by a violation of the NDA decides to take legal action, the cost of the resulting litigation can be significant. Multiple types of expenses are typically involved in this type of lawsuit. This includes the cost of hiring an attorney, the cost of expert witnesses, and the cost of going to trial. The cost of litigation can not only include the expenses of the party that brings a lawsuit against you for breaking a non-disclosure agreement, but it can also include your legal expenses too. Even if you win the case, you may still be responsible for paying your own legal fees.
Contacting a Lawyer for NDA Violations
When you contact a lawyer for NDA violations, they can help to avoid or reduce civil and criminal penalties. Due to the complexity of these types of cases and the potentially severe consequences, consulting with an attorney is strongly advised.
Negotiations with the holder of the NDA are a strategy that is often utilized in certain cases. This could include obtaining consent to disclose the information protected in the agreements.
A lawyer can also help you to understand the restrictions of an NDA. Many NDAs are binding contracts. However, some situations can occur where they may not be fully enforceable. Florida does place restrictions on restraints of commerce or trade. The restrictions designated by the state limit non-disclosure agreements to specific trade areas and geographic locations.
The time period of the NDA can also have its limits, affecting the agreement’s enforceability. Additionally, if the purpose of the NDA is illegal, it may not be enforceable either. Employers often create intentionally vague or overly complicated language in an NDA. An attorney thoroughly reviews the NDA to determine what it legally includes and any associated restrictions.
WFC has experience with NDA violations, particularly as they relate to employers. We are here to help. We are strong negotiators and litigators and have expertise with employment contracts. To consult with an experienced attorney regarding your NDA agreement, contact Wenzel Fenton Cabassa, P.A. today.
* Free Case Evaluation is not available for Employment Contract and Agreement consultations.
Please Note: At the time this article was written, the information contained within it was current based on the prevailing law at the time. Laws and precedents are subject to change, so this information may not be up to date. Always speak with a law firm regarding any legal situation to get the most current information available.