Arizona Non-Disclosure Agreement

The Arizona Non-Disclosure Agreement (NDA) is a document that permits one (or both) parties to share information with each other with the understanding that they legally cannot share any of the learned information. The agreement may be “Unilateral,” meaning that only one (1) party is restricted from sharing learned confidential information. Or it may be “Bilateral,” meaning that both parties must maintain the secrecy of one another’s confidential information. According to the Arizona State Legislature, confidential information, more frequently called “Trade Secrets,” includes the following: a “formula, pattern, compilation, program, device, method, technique or process.” Due to their usefulness, NDAs are commonplace in many institutions, including startups, libraries, hospitals, and companies large and small.

Trade Secret Law

The Uniform Trade Secrets Act, published in 1979, was a law designed to make Trade Secret Laws more uniform between the states. Arizona’s take on the law (called the “Arizona Uniform Trade Secrets Act,” located in Chapter 4) varies slightly from the universal version. The Act addresses a number of fundamental matters related to trade secret laws in the state, from what information is defined as a trade secret, to what damages may be sought if the agreement is breached.

Both parties are responsible for familiarizing themselves and subsequently complying with the provisions in the Act. To make it easier to navigate through the provisions, an index of the provision is provided below.

  • § 44-401: Defines the terms Improper Means, Misappropriation, Person, and Trade Secret.
  • § 44-402: States when Injunctive Relief may be enforced.
  • § 44-403: Explains how damages from misappropriation are interpreted.
  • § 44-404: Clarifies the situations that garner having the court pay for the winning party’s attorney’s fees.
  • § 44-405: Notes what the court will do to preserve the secrecy of the trade secret(s).
  • § 44-406: States the Statute of Limitations (how long the complainant has to bring up a case of misappropriation).
  • § 44-407: Explains how the law affects other laws within Arizona’s Legislature.

Definition of “Trade Secret”

According to § 44-401, Arizona states a trade secret as the following:

“[A] means [of] information, including a formula, pattern, compilation, program, device, method, technique or process, that both:

(a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”