Virginia Non-Disclosure Agreement (NDA)
The Virginia Non-Disclosure Agreement (NDA) is a form that serves the purpose of protecting a person or business’ secretive information from being exposed to third parties such as the public or competitors. It can be used as either a “bilateral” or “unilateral” agreement. If used as a unilateral agreement, there is one “disclosing party” and one “receiving party” who will respectively disclose and receive confidential information. If used as a bilateral agreement, both parties share and receive each other’s confidential information. In bilateral situations, there is less risk of disclosure, as both parties have something to lose. However, with the amount of time it takes to draft and sign an NDA, it’s well worth the risk it mitigates. Situations in which an NDA is commonly used include:
- The hiring of a new employee who will require access to secret company information in order to perform his or her job,
- The sharing of innovative technology that is not yet patented to potential investors, or
- The disclosure of confidential medical information by a patient to a healthcare professional.
Trade Secret Law
NDAs made in Virginia are bound by Chapter 26 of the Code of Virginia, “Uniform Trade Secrets Act”. This Act features nine (9) provisions that provide guidance on a variety of topics. A summary of the sections is as follows:
- § 59.1-336: Short title and definitions – Gives the title of Chapter 26 in addition to definitions for words and terms commonly used throughout the Act.
- § 59.1-337: Injunctive relief – Establishes that when an entity is wrongly using another’s trade secret for their own, or another’s gain, the victim can request the court order an injunction, which forces the party employing the secret to cease use immediately. This section covers when injunctions will be ordered and stopped, along with other pertinent information.
- § 59.1-338: Damages – Depicts when the courts will allow the complainant to recover damages and the maximum amount rewarded when malicious misappropriation exists.
- § 59.1-338.1: Attorneys’ fees – Gives the two (2) situations in which the court will award the winning party’s attorney’s fees. That is, when: 1) a claim of misappropriation is made in bad faith, or b) willful and malicious misappropriation exists.
- § 59.1-339: Preservation of secrecy – Lists the four (4) steps the court may use to ensure trade secrets are protected during litigation.
- § 59.1-340: Statute of limitations – Gives the statute of limitations for cases of misappropriation. After discovering the wrongdoing (or when it should have been discovered), the victim has three (3) years to bring a claim against the perpetrator.
- § 59.1-341: Effect on other law – Generally states that civil misappropriation is covered by Chapter 26 and that both contractual and criminal remedies are not affected by the chapter.
- § 59.1-342: Description unavailable – Repealed in 2015.
- § 59.1-343: Time of taking effect – States that the chapter was put in place on July 1st, 1986. It also states that any misappropriation that began before that date, including misappropriation that occurred before the date and continued past, does not apply.