21/7/2016 0 Comments
If you follow business news, you may already be familiar with the lawsuit Top Agent Network, Inc. has brought against Zillow, a popular real estate platform/marketplace. The lawsuit was over the misappropriation of trade secrets that arose when Zillow was considering investing in Top Agent. Oral discussions took place where Zillow representative ensured Top Agent their sensitive trade and business information would remain confidential.
Now it’s important to note that Top Agent failed to have a written non-disclosure agreement, which would come back to haunt them. As it turns out, Zillow was given access to quite a bit of sensitive business information that only Top Agent members are normally given as they performed their due diligence to consider investing in Top Agent. Eventually, however, Zillow didn’t invest and instead launched its own similar service to Top Agent, prompting the lawsuit.
Here’s what’s important for business owners: a federal district judge found that because Top Agent failed to both identify the trade secrets they wished to keep confidential as well as to properly make known their intent to keep such information confidential, they had no argument Zillow knowingly misappropriated trade secrets.
How Top Agent Could Have Avoided This
The sad reality is all it would have taken was a brief written NDA statement and the decision would have been reversed in Top Agent’s favor. If you own a business with any sort of information you need to keep confidential, you absolutely must use an NDA or expect a similar fate if anyone ever misappropriates your confidential business information.
Oral assurances are open to interpretation, vague, and often fail to adequately provide the protection your business needs – as long as they included what they need to in order to provide such protection.
What Should Be In Your NDA
There is one key you need to understand about NDAs: they are certainly not a one-size-fits-all legal document that anyone can download and use and be protected. Each NDA must be customized for your specific business and trade secrets if you expect it to hold up in a court of law. Here’s a quick rundown of what you need to include to ensure you are protecting your business:
List out all specific trade secrets you want to protect – leave no room for doubt about whether or not something must be confidential or not.
List out what remedies you will have at your disposal should there be a breach of the NDA.
List out any exceptions of who information can be shared with (this may include a specialist in an industry like an account, attorney, or a contractor that should also be required to sign an NDA – if unsure, consult with your business attorney.
You’ll need to include all the standard contract provisions like which state laws govern it, what courses should be used for dispute resolution, and anything else your attorney recommends for your given industry or business.
Still Have Questions?
This isn’t one of those things you want to leave to chance. That’s why Yoel Molina spends so much time working with his small business clients to ensure they have the essential business contracts in place they need to protect themselves and ensure the long-term success of their business. If you have questions about your NDA, need help drafting one, or need solid legal advice and representation for your Florida-based medium to small sized business, the Law Offices of Yoel Molina would be glad to represent you. Give our office a call or email today and we discuss your specific legal and business contract needs.