A Non-Disclosure Agreement (NDA), also known as a confidentiality agreement, is a legally binding contract designed to protect sensitive information from unauthorized use or disclosure. In California, NDAs are widely used in business transactions, employment relationships, and negotiations involving proprietary technology, trade secrets, or other confidential business assets. An “airtight” NDA is one that is enforceable under California law, clearly defines the protected information, and anticipates the practical and legal challenges that may arise in a dispute.
California’s approach to confidentiality agreements is shaped by statutory protections for trade secrets, contractual interpretation principles, and specific statutory limitations—particularly in employment contexts, where overbroad restrictions may be deemed unenforceable.
Definition of Confidential Information
An NDA must clearly define what constitutes “Confidential Information.” Vague or overly broad definitions can make enforcement difficult and may be struck down as unreasonable. Under the California Uniform Trade Secrets Act (Cal. Civ. Code §§ 3426–3426.11), information qualifies as a trade secret only if it derives independent economic value from not being generally known and is subject to reasonable efforts to maintain its secrecy.
In Altavion, Inc. v. Konica Minolta Systems Laboratory Inc., 226 Cal. App. 4th 26 (2014), the court confirmed that even concepts and ideas—when properly documented and protected—can constitute trade secrets.
Permitted and Prohibited Uses
A robust NDA should specify exactly how the receiving party may and may not use the confidential information. This is particularly important in business negotiations, joint ventures, or contractor relationships, where information sharing is necessary but must be carefully limited to the agreed purpose. Without these limits, it may be difficult to prove that a particular use exceeded the scope of the agreement.
Duration of Confidentiality Obligations
The NDA should state how long the confidentiality obligations last. For trade secrets, protection continues indefinitely as long as the information meets the statutory definition under Cal. Civ. Code § 3426.1(d). For other confidential business information, a reasonable time limit—often between two and five years—may be enforceable, depending on the nature of the information and industry practice.
Exclusions from Confidentiality
Well-drafted NDAs include standard exclusions for information that (1) is publicly known at the time of disclosure, (2) becomes public through no fault of the receiving party, (3) is lawfully obtained from a third party without confidentiality obligations, or (4) is independently developed without reference to the disclosed information. These exclusions protect the agreement from being overbroad and improve enforceability.
Return or Destruction of Information
An airtight NDA should require the return or destruction of confidential materials upon request or upon termination of the business relationship. This obligation should extend to all copies, notes, and derivative works to ensure complete control over the information after the relationship ends.
Remedies for Breach
The agreement should expressly provide for injunctive relief and monetary damages in the event of a breach. Under Cal. Civ. Code § 3426.2, courts may enjoin actual or threatened misappropriation of trade secrets. Additionally, under Cal. Civ. Code § 3426.3, a prevailing party may recover damages for both actual loss and unjust enrichment caused by misappropriation, and in cases of willful and malicious misappropriation, exemplary damages up to twice the actual damages.
Attorney’s Fees
Including an attorney’s fees provision can significantly strengthen enforcement. Under Cal. Civ. Code § 3426.4, courts may award reasonable attorney’s fees to the prevailing party in cases of bad faith misappropriation claims or defenses.
Compliance with Employment Law Restrictions
California public policy limits the use of NDAs in employment contexts. Under Cal. Civ. Proc. Code § 1001, NDAs cannot be used to prevent disclosure of factual information related to claims of sexual assault, harassment, or discrimination, except at the request of the claimant. Similarly, overly broad confidentiality clauses that function as non-compete agreements may be void under Cal. Bus. & Prof. Code § 16600.
Conclusion and Call to Action
An airtight Non-Disclosure Agreement is more than a formality—it is a critical safeguard for valuable business information. Poor drafting can leave proprietary data vulnerable and render enforcement uncertain. At Guiding Legal Counsel, APC, we draft, review, and enforce NDAs that stand up to California’s stringent legal standards, protecting your trade secrets and confidential business assets. Contact us today to schedule a confidential consultation and ensure your agreements are as strong and enforceable as the information they protect.