How to Take Action Against the Breach of a Confidentiality Agreement
A confidentiality agreement typically states that an employee cannot reveal to other people trade secrets or other private business information. Someone “breaches” (breaks) the confidentiality agreement when they divulge the private information to a third party or to the public at large. Confidentiality agreements, also called “non-disclosure agreements,” are typically used in employment contracts.Before you can take action against the employee, you need to document that the information has been disclosed, and you need evidence that ties your employee to the disclosure. If you have a strong case, then you can bring a lawsuit against your employee.
Building Your Case
Read your non-disclosure agreement.Your agreement is the basis of the lawsuit, so you should find your copy and read it. The non-disclosure agreement might have been part of the employment contract or it could have been a separate document.Non-disclosure agreements typically cover the following:
- trade secrets, such as a special recipe or formula for food or drinks
- manufacturing processes
- client lists
- sales plans
Gather proof the information has been leaked.You probably first suspected that an employee violated your non-disclosure agreement when you saw the information on the Internet or on television. Alternately, one of your competitors could be using your trade secrets. You need to gather proof that your confidential information is now in the public domain.
- Print off computer screens if the information appears on a website. If the information appears in a newspaper, then keep the newspaper.
- Write down the day and time when you saw the information on television.
- Get names of people who can testify that they were given the confidential information. These people could include competitors or strangers.
Gather evidence your employee leaked the information.In order to win a lawsuit, you need evidence. In particular, you will need to trace the information that was publicly disclosed back to your employee.Try to gather the following evidence, which can help you establish that the employee breached the non-disclosure agreement:
- Witness testimony. Someone might tell you that one of your employees divulged confidential information. If so, get the witness’s name, contact information, and a signed witness statement.
- Emails. Your employee might have disclosed confidential information through an email. If you have a copy, then retain it.
- Proof that no other employees had access to the confidential information. If only one employee has access, and the information is then leaked, then you can pretty much assume that your employee is the person who divulged it.
Meet with a lawyer.Only a qualified lawyer can properly advise you about what evidence to gather. You can find a lawyer by contacting your state or local bar association and asking for a referral.Call up the lawyer and schedule a consultation.
- At the consultation, show the lawyer your non-disclosure agreement and whatever evidence you have that links your employee to the disclosure. The lawyer can advise you whether you have a strong enough case to file a lawsuit.
- You should also talk about what kind of monetary compensation you can get. It can be difficult to put a number on the financial loss you have suffered because of the unauthorized disclosure.The lawyer will help you understand how you can establish damages.
Consider hiring the lawyer.Although you can bring a lawsuit yourself, you would be better off hiring a lawyer to represent you. Lawsuits are long and complicated. You will need to spend a considerable amount of time learning the law and learning the rules of the court which hears your case. A lawyer is already well-versed on these matters.
- Ask the lawyer about fees. Generally, lawyers charge by the hour, but a lawyer might agree to represent you for a flat-fee or using another arrangement.
- You can also ask about “limited scope representation,” where the lawyer does only the work that you give him or her. For example, you could have a lawyer draft legal documents but do nothing else. Or you could pay for the lawyer to coach you as you try to bring the lawsuit yourself. Limited scope representation is a great way to keep legal costs down but still get expert advice.
- Your non-disclosure agreement might have provided that the employee will have to pay your attorneys’ fees if you win a lawsuit.In this situation, a lawyer might be more willing to represent you, especially if you have a strong case.
Hire an investigator.You might need help getting enough evidence to tie an employee to the leak of confidential information. You should think about hiring a private investigator. Be sure to talk to your lawyer about hiring an investigator since there are employment privacy laws you must follow. However, a private investigator could find crucial information, including:
- How the employee communicated the confidential information. The employee might have sent an email or downloaded information onto a disk.
- Who the employee sent the information to.
- Whether the person who received the confidential information is using it in their own business. For example, your investigator could get a sample product and reverse engineer it to see if the competitor is using your trade secret.
Filing a Lawsuit
Draft a complaint.You will start your lawsuit by filing a “complaint” in court. The purpose of the complaint is to explain to the court who the parties are: you are the “plaintiff” (the person bringing the lawsuit) and the person you are suing is the “defendant.” The complaint also describes the circumstances that led to the lawsuit and makes a demand for money compensation.
- Your lawyer can draft the complaint for you. Make sure to review a copy before he or she files the complaint with the court.
- If you are representing yourself, then you should ask the court whether there is a printed “fill in the blank” complaint form you can use. Many courts now have these. In your complaint, you will have to allege that the defendant committed a “breach of contract” by violating the terms of the non-disclosure agreement that he or she voluntarily signed.
File your complaint.After your lawyer finishes the complaint, he or she needs to take it to the court clerk to file. There is usually a filing fee, which will vary by court. Your lawyer will probably invoice you for the fee.
- You can file yourself. Make several copies and take them along with the original. You will probably have to attach the employment contract or the non-disclosure agreement (if it was separate) to your complaint.
- Ask the court clerk to stamp your copies with the filing date.
- Keep a copy of all court documents for your records.
Serve notice of the lawsuit on the defendant.The person you are suing needs to know that they are being sued so that they can respond. You give notice by sending a copy of the complaint and a “summons,” which is a document you can get from the court clerk. Ask the clerk about acceptable methods of service, which vary by court.
- Generally, you can hire a private process server or pay the sheriff to make hand delivery on the defendant.You can find a process server in your phone book or online. Service typically costs around .
- You can also typically have someone 18 or older make hand delivery, provided that they are not a party to the lawsuit. For example, you could ask a neighbor to make delivery.
File your Affidavit of Service form.Whoever makes service will need to fill out an “Affidavit of Service” or “Proof of Service” form.You can get this from the court clerk. The server will need to sign the form and return it to you. File the original with the clerk and keep a copy for your records.
Read the defendant’s answer.The defendant will probably respond to your lawsuit by filing an “answer.” In this document, he or she responds to each allegation and raises different defenses. Typically, the defendant will defend the lawsuit by claiming the following:
- The defendant didn’t release the information.
- The information was already in the public domain any way.
- The non-disclosure agreement is legally unenforceable.
Preparing for Trial
Request documents from the defendant.After the defendant files an answer, the lawsuit enters a fact-finding phase called “discovery.” This is a critical part of any lawsuit involving breaches of confidentiality agreements because it will help you get proof that the defendant disclosed the information. During discovery, you can serve the defendant and other people with “Requests for Production of Evidence.” If the person served doesn’t respond to your request, you can go into court and ask the judge to sanction the person.
- You should request that the defendant turn over copies of any email or other communication dealing with the confidential information. Also request a list of names of who the employee has talked to about the confidential information.
- Send discovery requests to the third party that now has your confidential information. For example, if a competitor has a copy of your sales plan, then you can send Requests for Production of Evidence to that person and ask for the same information you requested from the defendant.
Ask the defendant to sit for a deposition.During a “deposition,” your lawyer asks the defendant questions. Depositions are face-to-face and allow for follow-up questions. They are usually held at a lawyer’s office with a court reporter present who records the questions and answers.
Defend against a motion for summary judgment.After discovery ends, the defendant might file a “motion for summary judgment” in an attempt to win the case without going to trial. In this motion, the defendant argues that a trial is unnecessary because there are no issues of material (meaningful) fact in dispute.
- You can defend against this motion by pointing out to meaningful facts that are disputed. For example, you might allege that the defendant divulged your trade secrets to a third party. The defendant will undoubtedly deny doing so. This disagreement is material, and you will need a jury to decide who is telling the truth.
- So long as you have some evidence showing that the defendant is responsible for leaking the evidence, then you can defeat the summary judgment motion.
Organize your evidence.If you have a lawyer, then he or she should do everything to get organized as your trial date approaches. However, you will have to organize your evidence if you are representing yourself. Be sure to do the following:
- Compile a list of witnesses. Remember that your witnesses can only testify as to what they know personally.For example, if someone overheard the defendant leaking confidential information over the phone, then that person can testify as to what they heard. However, people can’t testify as to gossip. Once you have identified witnesses, you will need to give the defendant a list of their names.
- Serve witnesses with a subpoena. A subpoena is a request for your witnesses to appear at court on a certain date to testify. Ask the court clerk for a blank subpoena form and fill it out. You need to serve each witness with a subpoena.
Create exhibits.You can introduce documents that help your case. For example, you might want to introduce an email in which the defendant talks about the confidential information. You can make an exhibit by attaching an exhibit sticker to it. Get exhibit stickers from your court clerk or an office supply store.
- Make copies of exhibits. You will need to give the defendant a complete set of exhibits. Ask the court clerk how many copies in total to make.
Prepare for your own testimony.You will probably have to testify at trial, so you should prepare with your lawyer. You can do a practice run where your lawyer asks you questions. Your lawyer can also pretend to be the defendant’s lawyer and cross-examine you.
- You will probably have to testify to basic information. For example, you will probably be asked to identify the employment contract and the non-disclosure agreement. You have to identify them before your lawyer can introduce them into evidence.
- You will also have to testify as to how you found out that the defendant breached the non-disclosure agreement.
Consider settlement.You should also think about negotiating a settlement. Settlement has many advantages—you guarantee yourself some money compensation and you avoid a costly and unpredictable trial. You should talk with your lawyer about whether you want to settle out of court.
Go to trial.If you can’t reach a settlement, then you will need to go to trial in order to get compensated for the breach of the confidentiality agreement. If you have a lawyer, he or she can handle everything at trial. The typical trial will involve the following:
- Jury selection.You will need to pick a jury if either you or the defendant opted for one. Jury selection involves listening to prospective jurors answer questions and then asking the judge to dismiss any who appear biased.
- Opening statements.Your lawyer will go first. The purpose of the opening statement is to give the jury a roadmap of what the evidence will be.
- Presentation of your evidence.Your witnesses testify first. For example, a witness could testify that the defendant gave him the confidential information. You must trace the disclosed information back to the defendant.
- Cross-examination of the defense witnesses.The defendant also can have witnesses testify. Your lawyer can ask questions on cross-examination. The purpose of cross-examination is to undermine the witness’s credibility. For example, if the defendant denies leaking the confidential information, then your lawyer must point to inconsistencies in the defendant’s story or to statements made earlier that contradict the defendant’s testimony at trial.
- Closing argument.In closing argument, your lawyer summarizes the evidence for the jury. You will need to prove that it is more likely than not that the defendant breached the non-disclosure agreement.
- Jury verdict.After the judge reads the jury its instructions, the jury retires to deliberate. In some states, the jury doesn’t need to be unanimous for you to win. You should talk with your lawyer about appealing if you lose.
Collect your judgment.Should you win at trial, then you will need to collect money from the defendant. The court will not do this for you. With luck, the defendant will just pay up.
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