What Happens If You Break an NDA in Indiana?
Updated: 2 days ago
If you break a nondisclosure agreement (NDA) in Indiana, the other party may sue you for breach of contract, ask a court to order you to stop using or sharing the information, and seek money damages. If the information qualifies as a trade secret, Indiana's Uniform Trade Secrets Act may add more remedies. What actually happens depends on the agreement's wording, what was disclosed, and whether the other party was harmed. Federal law also protects certain disclosures, such as reporting a suspected violation of law to the government.
This article is written for the person who signed the NDA, such as an employee, contractor, vendor, or business partner. If your business is the one trying to enforce an NDA, see our article on how to handle a breached NDA.
What counts as breaking an NDA?
Whether a disclosure is a breach depends on the agreement itself. Read these parts closely:
The definition of confidential information. Some NDAs cover only specific information. Others are written very broadly.
Exclusions. Many NDAs exclude information that is already public, that you knew before signing, or that you received independently.
Permitted uses. An NDA may allow you to use information for a specific project or to share it with your own lawyer or advisors.
Disclosures required by law. Many NDAs allow disclosure under a subpoena or court order, often with a requirement to notify the other party first.
How long it lasts. Some obligations end after a set number of years. Others last as long as the information remains confidential.
Our article on confidentiality clauses in small business contracts walks through common terms.
What can happen after a breach?
A breach of contract claim
An NDA is a contract. To win a breach of contract claim in Indiana, the other party generally must prove that a contract existed, that you breached it, and that the breach caused damages. Indiana's limitation period for actions on many written contracts is ten years (IC 34-11-2-11), so a claim can sometimes be filed years after the alleged breach.
A court order to stop the disclosure
The other party may ask a court for a temporary restraining order or preliminary injunction under Indiana Trial Rule 65. A temporary restraining order issued without notice is short-term, generally lasting no more than ten days unless extended. A preliminary injunction requires notice and a hearing.
Money damages and contract terms
The other party may seek damages for losses caused by the breach. Some NDAs also include:
Liquidated damages. A set dollar amount owed for a breach. The Indiana Supreme Court has explained that liquidated damages clauses are ordinarily enforceable, but clauses that function as penalties are not (American Consulting, Inc. v. Hannum Wagle & Cline Engineering, Inc., 2019).
Attorney's fees. Indiana generally follows the rule that each side pays its own attorney's fees unless a contract or statute provides otherwise. Many NDAs include a fee-shifting clause.
Trade secret claims
If the information is a trade secret, the Indiana Uniform Trade Secrets Act (IC 24-2-3) may apply in addition to the contract.
A court may enjoin actual or threatened misappropriation (IC 24-2-3-3).
Damages can include actual loss and unjust enrichment. If the misappropriation was willful and malicious, a court may award exemplary damages of up to twice that amount (IC 24-2-3-4).
A court may award attorney's fees for willful and malicious misappropriation, or against a party who brings a misappropriation claim in bad faith (IC 24-2-3-5).
A trade secret claim generally must be brought within three years after the misappropriation is discovered or should have been discovered (IC 24-2-3-7).
The Act does not replace contract law, so a business may bring both a contract claim and a trade secret claim (IC 24-2-3-1).
Is breaking an NDA a crime?
Breaching a contract is generally a civil matter, not a crime. Taking or using trade secrets, however, can raise separate legal issues under state and federal law. If you are contacted by law enforcement about confidential business information, speak with a lawyer before answering questions.
Disclosures the law may protect
An NDA cannot override every legal right. Federal laws that may protect certain disclosures include:
Reporting suspected violations of law. Under the Defend Trade Secrets Act, an individual is immune from liability under federal or state trade secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a sealed court filing (18 U.S.C. 1833(b)). Employers must give notice of this immunity in agreements covering trade secrets or confidential information entered into or updated after May 11, 2016.
Communicating with the SEC. SEC Rule 21F-17 prohibits anyone from impeding a person from communicating with the Commission about a possible securities law violation, including by enforcing a confidentiality agreement.
Sexual assault and sexual harassment disputes. Under the federal Speak Out Act, nondisclosure and nondisparagement clauses agreed to before a dispute arises are not judicially enforceable in sexual assault or sexual harassment disputes (42 U.S.C. 19403).
Workplace discussions. Federal labor law may protect some non-supervisory employees who discuss wages and working conditions. This area of law has been changing, so check the current rules for your situation.
These protections are specific. They do not allow every disclosure, and they may not prevent a contract claim in every case.
Is your NDA enforceable?
Indiana courts generally enforce confidentiality agreements. Courts may look more closely at a confidentiality provision that is so broad it works like a noncompete and keeps someone from earning a living in their field. Whether a particular NDA is enforceable depends on its terms and the facts.
What to do if you are accused of breaking an NDA
Do not ignore the letter or demand. Note any deadlines.
Find your signed agreement. Look for definitions, exclusions, notice requirements, choice of law, venue, and attorney's fee provisions.
Stop the disputed use or disclosure while you get advice, if you can do so without harming your own legal position.
Do not delete files, emails, or messages. Destroying evidence can create serious problems in litigation.
Avoid public statements about the dispute.
Get advice before signing anything, such as a settlement, a certification that you returned all information, or a new agreement.
If you received a cease-and-desist letter, our article on what to do after receiving a cease-and-desist letter may help.
Frequently asked questions
Can I go to jail for breaking an NDA?
A breach of contract by itself is a civil matter. Separate criminal laws may apply to theft of trade secrets or other misconduct, so get legal advice if a criminal investigation is mentioned.
How long does an NDA last?
It depends on the agreement. Some NDAs set a fixed term, while obligations for trade secrets may continue as long as the information remains secret.
Can I share NDA information with my lawyer?
Federal law protects confidential disclosures of trade secrets to an attorney to report or investigate a suspected violation of law (18 U.S.C. 1833(b)). Many NDAs also expressly allow disclosure to your own legal advisors. Check your agreement.
What if I never received anything confidential?
If no information covered by the agreement was used or disclosed, there may be no breach. The agreement's definition of confidential information is often the key question.
Questions about an NDA?
If you are worried about an NDA you signed, have been accused of breaching one, or want an NDA reviewed before you sign, you can schedule a consultation with Brinkley Law or learn more about our business law services.
Brinkley Law, 8888 Keystone Crossing, Suite 1300, Indianapolis, Indiana 46240.
This article provides general information about Indiana law and is not legal advice. Reading it or contacting Brinkley Law does not create an attorney-client relationship. The application of the law depends on the facts of each matter.
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