South Dakota Non-Disclosure Agreement

The two (2) parties who enter into a South Dakota Non-Disclosure Agreement (NDA) do so in order for one party (the “Disclosing Party”) to freely disclose confidential information or trade secrets to another party (the “Receiving Party”) without the worry that they will release the information to the public or a third party. Because an NDA is legally binding, the Disclosing Party can bring the Receiving Party to court for breach of contract if the information is leaked. Thus, it is uncommon for a Receiving Party to breach an NDA as they risk legal action being taken against them. Not only is litigation expensive and time-consuming, it can also cause a loss of reputation.

What Are the Benefits of Signing an NDA?

The benefits of creating an NDA for the Disclosing Party are often noted. However, there are also benefits of signing an NDA for the Receiving Party.

There are many reasons the Receiving Party also benefits from this legal arrangement. For instance, many individuals and businesses with confidential information will only disclose such information if they have some legal guarantee that the Receiving Party will not leak the information. In most instances, this legal guarantee will come in the form of an NDA. Unless they sign the NDA, they will not be informed of the information they require to perform a certain job or advance with a specific task.

Another reason the Receiving Party benefits from the NDA is because it provides them with clear guidelines for how they should act with the confidential information in their possession. If the Receiving Party is ever in doubt what they can or cannot do with the information, they can simply refer to the NDA for guidance.

One final reason signing an NDA benefits the Receiving Party as well is that it acts as a useful reference point should any issues with the contract come up. For instance, if the Disclosing Party were to wrongfully accuse the Receiving Party of breaching the NDA, they could easily resolve the matter by referring to the terms of the contract.

Trade Secret Law

The Uniform Trade Secrets Act (UTSA) was designed for adoption across the country in order to enhance consistency of Trade Secret laws between all the states. The reason this was prioritized is so that it would be easier for companies with trade secrets to conduct business nationally. Forty-eight (48) out of fifty (50) states adopted the Act, including South Dakota. South Dakota’s adoption of this Act, Chapter 37-29, lays the foundation for how the state’s courts handle cases regarding stolen trade secrets.

Taking the time to understand the different sections of the chapter can aid those wishing to edit the NDA template provided here. It also will help those already bound under an NDA. Below are the sections of the chapter along with a brief summary of each.

  • § 37-29-1: This section gives the definitions of “Improper,” “Misappropriation,” “Person,” and “Trade Secret”.
  • § 37-29-2: Gives a breakdown of when the courts can/will order an injunction. Injunctions are typically abolished when the trade secret(s) cease to exist.
  • § 37-29-3: When the complainant can recover damages. For malicious (intending to do harm) misappropriation, the courts can award up to two times (2x) what would have been previously awarded.
  • § 37-29-4: Attorney’s fees will be awarded if a claim is not made for just reasons, if a request to terminate an injunction is made bad faith, or if the misappropriation was conducted maliciously.
  • § 37-29-5: This section discusses the steps the courts will take to prevent trade secrets to be released during litigation.
  • § 37-29-6: The amount of time a victim of stolen trade secrets has to bring a case, which is three (3) years.
  • § 37-29-7: States how the chapter does and does not affect other laws.
  • § 37-29-8: Explains that the chapter was meant to be in line with all the states that adopted the Uniform Trade Secrets Act.
  • § 37-29-9: Highlights the short title of the chapter: the Uniform Trade Secrets Act.
  • § 37-29-10: The word “Reserved”.
  • § 37-29-11 – States the chapter took place on July 1st, 1988. Also states the chapter does not cover misappropriation that occurred before that date.

How to Write

Step 1 – In order to start working on the NDA, the Disclosing Party will firstly need to download a template of it in either Adobe PDF or Microsoft Word.

Step 2 –  Both parties must then read through the contract until they are sure they agree to all of the terms, and believe them to be both reasonable and compliant with the Uniform Trade Secrets Act. If there are any points in the contract that both parties do not agree to, or are not compliant with the Act, these should be improved upon.

Step 3 – Next, the Current Date should be filled in. Then, the Disclosing Party and the Receiving Party should next take it in turns to enter their Full Name and Address.

Step 4 – The parties will next need to enter their respective Names in print and their Company Titles. When both parties are ready to sign the contract, they should write their Signatures followed by the Dates in which they are signing the document.