You took the right step for your business by putting NDAs in place. You felt safe and protected knowing your company information was shielded from disclosure and misuse until someone went along and breached your NDA.

How did this happen? What can you do?

How do you get back to normal?

This article will answer all the questions and lay out the action steps to take when someone breaches your business NDA.

The Reality of Business NDAs

Truth is, NDAs are a document. They can’t literally walk up to someone and slap their hand before breaching, or whispering into someone’s ear that what they are saying is violating an NDA.

It’d be nice, but life just isn’t there yet.

Instead, NDAs do three key things to stop breaches:

First, they put the other side on notice to take care of your information.

The other side has signed and agreed to take care of your information. It is a decision of whether they work to keep that promise or not. Either way, they cannot claim they didn’t know.

Secondly, NDAs give you the ability to get the other party to step up should they mess up.

It can be easy for the other side to shy away from mistakes, or claim something wasn’t your fault, but when there’s an NDA they are obligated to stop the breach or be responsible for the consequences of not acting.

Lastly, and possibly most importantly, is if something goes wrong, big or small, you have choices in getting the damages repaired and reimbursed.

Mistakes happen, but how easy and fast it is to recover from those mistakes is key in business. That is what NDAs are all-stars at.

Need an NDA ASAP? I got you. Go from draft to done now with NDA Today. 

II. Understanding Types and Causes of NDA Breaches

Despite popular opinion, many NDA breaches are not intentional.

Yes intentional breaches occur, but a majority of NDA breaches are out of negligence, or undertaken by a third party.

Intentionality, awareness, or mistake are not required in order for the NDA to be enforced or for your opportunity for reimbursement.

A breach is a breach when it comes to NDAs.

Types of NDA breaches:

• Intentional disclosure: Deliberate sharing of confidential information.

A disgruntled or upset employee may take intentional action to harm their employer.

This happened to a leading beverage company when an employee sent the secret beverage formula directly to the competitor. Thankfully both companies has policies in place to get the situation under control quickly and hold the less-than-ideal employee accountable.

• Negligent disclosure: Accidental or careless release of information.

Negligence can happen out of good intention or it could be an honest mistake.

An accidental disclosure would be leaving sensitive information on the table in a cafe while you use the restroom and a third party comes along and copies or uses that information.

A simple oversight that left confidential information exposed.

I had a client where the breach of the NDA came out of good intentions.

A potential new customer was working with a sales rep to license a product the rep’s company offered. The product used third party information together with the sales rep’s company product to offer an enhanced solution.

The new customer wanted more access out of the third party information for their use case, so the sales rep went directly to his company’s supplier to get the deal closed for the new customer.

Well, the NDA with the new customer said the sales rep’s company was not allowed to share the details of their conversations with any third party, nor mention the customer was in talks with the company.

The customer found out the NDA was breached when 1. The sales rep excitedly told them his progress on the deal; but also 2. When the customer went to the third-party supplier to make their own deal they learned the vendor already had the details.

The customer wanted to approach the deal with the vendor their way and did not appreciate the sales rep going ahead of them, even though the sales rep was trying to help his customer and his company already had the vendor relationship.

Thankfully, the vendor kept everything secure, so no true harm came from the breach, but the overshare nearly lost the rep’s company the new multi-million dollar client and the rep did receive a reprimanding for the violation.

• Third-party breach.

Is it me, or does it feel that there is always a new headline about a data leak from some big company we trusted? Target, Home Depot, and the Yahoo breaches seem lifetimes ago and plenty more have landed in the news in recent years.

How do these hacks happen? Password sharing? Data security weaknesses? Third-party hackers and ransomware?

Well, if that unauthorized access happens to access your information via someone you're in an NDA with’s servers or data center it’s possible they violated your NDA.

I had a client whose customer’s customer had password sharing.

When the employee used someone else’s login to access the database that employee was not originally granted access to, a huge windfall landed on three supplier’s plates costing tens of thousands of dollars in harm for each of them.

The company permanently lost its supplier and one of those suppliers nearly lost an entire product offering over the sub-customer’s breach because the original data supplier was already under heat for another violation.

It was an innocent internal password share and yet the harm was massive to 4 industry leading companies.

No matter the type of breach that may befall your company, the damages could be minor to detrimental. Negligent or intentional causation does not determine the financial nor the reputational harm breaches can cause for you, your customers or your suppliers. 

Identifying an NDA Breach

With so many ways an NDA can be breached, it can be even tough to identify if one has occurred.

Sometimes you may get the smoking gun piece of evidence like someone telling you they shared your information, or you see your company info posted in its original form on a website or social account.

Other times, evidence of a breach may be slower and tougher to identify. Especially if the breach happened behind closed doors, or is a leak that’s dripping a little information over time.

While not always straightforward, several indicators can help you detect a potential breach:

1. Monitoring Communications: Regularly review emails, instant messages, and other forms of communication for any unauthorized disclosure of confidential information. Implement data loss prevention (DLP) tools to automatically scan for sensitive data in outgoing communications.
2. Unusual Activity: Pay close attention to unusual patterns of behavior among employees or partners who have access to confidential information. This might include sudden resignations, unexplained wealth, or unusual interest in specific projects or competitors.
3. Competitor Actions: Monitor your competitors' activities closely. If they suddenly launch a product or service remarkably similar to your confidential plans, it could be a sign of an NDA breach.
4. Keep Track of Press Releases and Competitors' Social Media: Monitor press releases and social media activity from competitors. Look for any announcements or posts that seem to mirror your confidential information.
5. Whistleblower Reports: Encourage a culture of openness and provide channels for employees or partners to report any suspected breaches confidentially.
6. Data Leakage Monitoring: Utilize software that can track and alert you to any unauthorized access or downloads of confidential files or documents.

Remember, early detection is key to minimizing the damage caused by an NDA breach and as you’ll see later in steps to take when a breach has occurred, the other side may not be aware of the incident.

By staying vigilant and proactive in monitoring for potential breaches, you can protect your valuable intellectual property and maintain your competitive advantage.

What to do If your NDA is breached?

Crap, despite doing everything right, some butt-wipe has breached your NDA. Intentionally or not, you want to get this resolved ASAP.

Here’s what you need to do.

There are two key phases when it comes to an NDA breach:

Phase 1. Stop the Breach; and

Phase 2. Recover from the Breach

Phase 1: Stop the Breach

How can you possibly return to normal if harm is still occurring? That is why it’s important to take quick action to stop a breach ASAP.

The two key ways to stop a breach are 1. Send a cease and desist letter; and 2. Get the courts to step in if needed.

The other party is responsible for the fallout of an NDA breach, so they are incentivized to stop the breach. If they advent taken that action already, it may be that they ar not aware of the breach.

Unless the breach is an intentional one, it is possible the other side is not aware of the breach. Same would go for a disgruntled employee. The manager may not be aware of what has happened yet.

So don’t assume the other side knows. Put them on legal notice by sending a cease and desist letter.

Looking for a cease and desist letter? You can find everything you need here. 

If they do not act quickly, or you don’t have the time to send them a letter because the harm is too great too fast, you can go to the courts and ask for an injunction.

An injunction is a court order telling the other side to take action or stop an action. They are not easy to get, but no one wants to be on the hook for violating a court order on top of breaching a contract.

Phase 2. Recover from the Breach

Phase one is complete. You’ve gotten the breach stopped, your data is no longer being leaked and the harm is finally under control.

Well done. That one can feel great and is an accomplishment to celebrate. Truly!

But you're not done. You’ve lost money in all this.

You hired forensic analysis, informed suppliers, customers, and governments, you took on fees and expenses to get it under control.

You may have also lost profits and suffered reputational harm along the way.

Here are some of the common areas where harm occurs in NDA breaches:

• Financial losses:
• Loss of competitive advantage
• Decreased market share
• Damage to reputation
• Damaged relationships:
• Loss of trust with partners, investors, and clients
• Difficulty forming future partnerships
• Employee morale:
• Loss of confidence in leadership
• Increased turnover
• Negative impact on company culture

The windfall to your company has been huge and its time to recover.

There are two key ways to recover:

1. Demand letter.

Sending a demand letter to the breaching party will list out the harm and the costs of harm you suffered from the breach and ask the other side to pay for it.

Demand letters can be great because if the other side is eager to get the breach over with and behind them, they may be looking to avoid added costs and quickly pay or offer to settle.

But maybe they aren’t eager to cover the damages they caused and refuse to cover the cost.

Looking for a demand letter template and guide? NDA Happily Ever After has Everything you need. 

What can you do?

This is when you may choose to file a lawsuit.

2. Lawsuit

Lawsuits have gained a reputation for being punishment, mean and evil- that is just not the case in contracts.

In contracts, lawsuits are one party asking the judge to clarify something or, confirm who is responsible for what.

Sometimes parties don’t know who caused what, or who owns what. They want an impartial third party to help.

This is how the courts are used in business lawsuits.

The court will look at the NDA, the details of the breach and determine what the other side may be responsible for.  The court will tell the other side their opinion and order them to pay their portion.

The court order can also be helpful to you because if the other side still refuses to pay, you can get additional help in getting your payment.

Conclusion on NDA Breaches

Protecting your intellectual property is a top priority for any business, and NDAs are a crucial tool in your arsenal. While breaches can be costly and disruptive, understanding the different types of breaches, knowing how to detect them, and taking swift action can mitigate the damage.

By following the steps outlined in this article—from sending a cease and desist letter to seeking legal remedies and negotiating settlements—you can regain control and recover from a breach.

Remember, a well-crafted NDA, vigilant monitoring, and a proactive response are your best defense against the risks of confidentiality breaches. If you're looking to get set up with a Business NDA, check out our resources here

If you're navigating NDA challenges or have questions about protecting your business's confidential information, don't hesitate to check out our NDA Happily Ever After program. The sooner you address the issue, the better your chances of minimizing the damage and ensuring your business's continued success.

You’re doing great stepping up and taking action to protect your business. You got this!

With Love and Awesomeness,

CEOLegalCoach