Breach of Confidentiality Agreement

For information to be classified as "confidential" or "protected" under an agreement in D.C. and to support a successful claim, it must generally satisfy the following criteria:

• Commercial or Strategic Value: The information provides the owner with an economic advantage over competitors who do not have access to it. This financial worth is key to its protected status.
• Reasonable Efforts to Maintain Secrecy: The disclosing party must demonstrate they took adequate steps, such as using NDAs, limiting access, and marking documents as confidential, to keep the information secret.
• Non-Public Status: The information must not be publicly known or readily ascertainable. If the data can be easily derived, reverse-engineered, or found through public sources, it will likely lose its confidential status and be deemed unenforceable.

Even if a breach doesn’t meet the high threshold for criminal charges, it can still expose the violator to substantial civil consequences and severe financial penalties. The primary goal of a civil lawsuit is to compensate the aggrieved party for their losses and to prevent any future unauthorized use of the information.

Typical civil remedies available through Washington D.C. courts include:

• Compensatory Damages: Monetary awards covering the actual financial losses directly incurred due to the unauthorized disclosure or use of the confidential information.
• Injunctive Relief: Court orders requiring the breaching party to immediately cease all further disclosure or usage of the information, often the most critical remedy to stop ongoing harm.
• Liquidated Damages: A pre-determined sum specified in the original agreement as the penalty for a breach, which courts will enforce if the amount is a reasonable estimate of the potential harm.
• Punitive Damages: Awarded in exceptionally rare cases where the breach is determined to have been particularly willful or malicious, serving as a punishment rather than simple compensation.

Not all confidentiality breaches are crimes, as NDAs are civil contracts. However, if the disclosed information qualifies as a trade secret under the D.C. Uniform Trade Secrets Act (UTSA), criminal charges may apply. Criminal prosecution is typically reserved for actions that involve a clear intent to steal or use the secret for competitive advantage.

Under D.C. Code § 36–403 and related statutes:

• Intentional Misappropriation: The willful theft, unauthorized use, or disclosure of recognized trade secrets can be prosecuted as a criminal offense, not just a civil one.
• Malicious Conduct: If the breach is executed willfully and maliciously, especially for competitive or financial advantage, it can result in significant jail time, potentially up to 10 years, and/or substantial fines up to $25,000.

To be enforceable under D.C. law, a confidentiality agreement should clearly state the following structural and substantive elements:

• Definition of Confidential Information: A specific list or detailed examples of the exact information (e.g., pricing, client lists, research data) that must remain protected and not publicly disclosed.
• Scope & Duration: A clear timeline for the confidentiality obligation and explicit identification of the applicable individuals or departments bound by the terms.
• Purpose of Agreement: A concise statement explaining why the confidential information is being shared and the limited, authorized purpose for which the receiving party may use it.
• Remedies for Breach: Explicit reference to the legal recourse available, such as injunctive relief, the pursuit of monetary damages, or required mechanisms like binding arbitration.

Individuals or entities accused of violating an NDA have several potential defenses that can be raised in a D.C. court:

• Prior or Independent Knowledge: The information was already public, known within the industry, or independently discovered by the accused party before the agreement was executed.
• Vagueness or Overbreadth: The confidentiality agreement is legally deficient because its terms are too vague or the time/scope restrictions are unreasonable.
• Lack of Demonstrable Harm: The alleged breach, while perhaps technical, did not cause any measurable, actual, or demonstrable economic harm to the disclosing party.
• Legal Obligation: The disclosure was made under a compulsory legal requirement, such as a validly issued court order or subpoena, which legally overrides the contractual obligation.