Arizona Non-Disclosure Agreement
July 1, 2019
Arizona Non-Disclosure Agreement
NDAs or confidentiality agreements are used to stop an individual or entity from stealing a company’s proprietary or trade secret information both during and after their relationship with the company has ended. In Arizona, these types of restrictions can be found in both contracts or in Arizona law under the Arizona Uniform Trade Secrets Act (“AUTSA”). See A.R.S. §§ 44-401-407.
Because these restrictions typically do not restrict an individual from performing work for another company but rather only restrict the information that can be used by a past employee, Arizona judges tend to enforce these provisions when they are reasonably written.
Contractual Non-Disclosure or Confidentiality Agreements
Under contractual non-disclosure or confidentiality agreements, Arizona judges are primarily looking at how broad restrictions are being put into place. Sometimes confidentiality agreements are actually non-compete agreements. For example, in the Orca Communmication Unlimited, LLC v. Noder case, the Arizona judge found that attempt to restrict the former CEO (Noder) from “directly or indirectly circumventing or competing with the Company with regard to any Confidential Information” was unenforceable because it was really a non-compete agreement.
Additionally, if a company 1) does not keep the information confidential, or 2) the information is generally known to the public, then this is an important consideration when determining if the information is actually confidential. See i.e. Enterprise Leasing Company of Phoenix v. Ehmke; Amex Distributing Co. Inc. v. Mascari. When the confidentiality provision is not overly broad, and the company both keeps the information confidential as well as the information is not generally known to the public, then the confidentiality agreement is typically enforceable.
Trade Secrets under AUTSA
Whether or not an employment contract existed between a company and an employee, the AUTSA applies to all employment situations. Under A.R.S. § 44-401, a trade secret is defined as follows:
Trade secret means information, including a formula, pattern, compilation, program, device, method, technique, or process, that both:
- 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; and
(b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Under A.R.S. § 44-401 it explains when a trade secret is improperly taken (“misappropriated”) by someone as follows:
Misappropriation means either:
(a) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
(b) Disclosure or use of a trade secret of another without express or implied consent by a person who either:
(i) Used improper means to acquire knowledge of the trade secret;
(ii) At the time of disclosure or use, knew or had reason to know that his knowledge of the trade secret was derived from or through a person who had utilized improper means to acquire it, was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use, or was derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
(iii) Before a material change of his position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
If an item is found to be a “trade secret” and is then determined by a judge to have been “misappropriated,” then the question is, what happens next
So what happens if someone does take confidential information. There are three facets of recovery available: 1) stopping any misuse of the stolen information and requiring that the trade secrets be returned (this is called an injunction), 2) payment for any harm that was caused by the individual stealing the information, and 3) payment of attorneys’ fees for having to litigate the issue. See A.R.S. § 44-402, § 44-403, and § 44-404
Contact Counxel Legal Firm
If you have questions about a non-disclosure/confidentiality agreement or the Arizona Uniform Trade Secrets Act or you would like to set up a strategy session with an attorney, then Counxel Legal Firm would love to help. Contact us at 480-536-6122 or at email@example.com. Don’t forget to check out the good things that others are saying about the services they received from Timothy Coons on Google.
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