Texas Non-Disclosure Agreement
The Texas Non-Disclosure Agreement (NDA) is a template specifically designed for use by business professionals and companies that prevents hard-earned information that was invented, developed, or improved upon from getting into the hands of people or institutions that could use the information to undermine the rightful owner of said information. Also known as a “Confidentiality Agreement,” the legal contract has become a go-to legal tool in remaining competitive as it allows any party with confidential information (the “Disclosing Party”) to breathe-easy in discussions where private information will need to be deliberated with another party (the “Receiving Party).
Trade Secret Law
The Texas Uniform Trade Secrets Act (Title 6 Chapter 134A) is a variation of the Trade Secrets Act that was adopted by all but two (2) states. It encompasses a total of eight (8) provisions, which cover matters such as key definitions and when damages will be rewarded in cases of misappropriation. While each Non-Disclosure Agreement may be unique, all must equally comply to these provisions. For this reason, the Act is essential reading for both parties. To aid anyone seeking to create an NDA, a quick explanation of each provision has been noted below.
- § 134A.001: The citeable title of the Act.
- § 134A.002: Gives the definitions of the following terms: “Claimant,” “Clear and convincing,” “Owner,” “Proper means,” “Reverse engineering,” “Trade secret,” and “Willful and malicious misappropriation”.
- § 134A.003: When an injunction will be ordered by the court.
- § 134A.004: Explains when damages will be rewarded to the victim of misappropriation. Courts can use both the benefit the misappropriator received from using the secrets plus the actual damage the victim endured when determining the number of damages to reward
- § 134A.005: This section goes over when the court will pay for the prevailing party’s attorney’s fees.
- § 134A.006: Includes the actions the courts take to ensure trade secrets remain confidential and lists the components of the “balancing test,” which is used to determine if a party should be restricted access to the other’s trade secret during litigation.
- § 134A.007: How Chapter 134A affects other laws within Texas’ legislature.
- § 134A.008: A general statement referring to Texas’ intention of making their Uniform Trade Secrets Act parallel to the other states that adopted the Act.
NOTE: Texas courts will enforce any rightful trade secrets that have been protected through the use of an NDA – however, those preparing to draft or sign this type of contract should ensure the conditions within the document are not too broad or restrict an abundance of information. If the language contained in the document is excessively undefined, it could be interpreted as a non-compete agreement, which would require the court to reform the agreement. The bad part? The issuer of the NDA is not allowed to recover damages if a reformation is required to occur.
How to Write
Step 1 – Download the Agreement
Proceed to download the document in Microsoft Word (.docx) or Adobe PDF (.pdf).
Step 2 – Edits & Additions
Upon downloading and opening the template, take the time to read through every condition to ensure it applies to the Disclosing Party’s needs. For example, a section describing the specific jurisdiction that the contract is enforceable can be added, or the Term (4) can be altered to be made invalid after a span of a certain amount of time (e.g; five (5) years).
Step 3 – Names & Addresses
Enter the Date at the top of the page. Make sure to spell out the full name of the month (ex: “November”). On the next line, have the Disclosing Party write their Full Name followed by their street Address. On the next line, repeat this for the Receiving Party.
Step 4 – Signatures
To make the contract official, have the parties enter their Printed Names, Company Titles (if this field doesn’t apply – ignore), their Signatures (written or e-signed), and the Dates in which they wrote their signatures into the provided fields.
Note on Electronic Signatures: According to the Uniform Electronic Transactions Act, “A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.”