A Vendor or Partner Breached Our NDA. What Can I Do?

The short answer, expanded

A non-disclosure agreement is a contract, so the first claim is breach of contract under Texas law. That claim has the advantage of not requiring you to prove the information was a trade secret: you need to prove the agreement covered it and the other side disclosed or used it in a way the agreement forbids. The disadvantage is that contract remedies are limited to what you can prove you lost, unless the agreement itself adds more.

Where the information is valuable because it is secret and you took reasonable steps to keep it so, a trade secret claim runs alongside. It brings a statutory injunction, exemplary damages for willful and malicious conduct, and a court obliged to keep the information sealed during the case. Most NDA cases worth filing plead both and let the facts decide which carries the weight.

Start with the agreement itself

Before anything else, read the NDA against the facts, because NDAs vary more than people expect. The questions that decide the case are usually these:

• What is confidential? Some agreements cover everything disclosed; others only material marked confidential or confirmed in writing within a set number of days. Information you shared orally in a meeting and never confirmed may be outside a marking-based agreement.
• What are the exclusions? Almost every NDA excludes information that was already public, already known to the recipient, independently developed or received from a third party without restriction. The other side will argue one of these.
• What use is permitted? An NDA for due diligence allows use to evaluate the deal. Using the same information to compete, or to approach your customers, is the breach.
• How long does it last? Many agreements expire after a set term, sometimes with a longer or perpetual period for trade secrets. A disclosure after expiry is not a breach of that agreement.
• What does it say about remedies? Look for an injunctive relief clause, a liquidated damages clause, a fee clause, a venue or arbitration clause and a choice of law. Each changes the path.

The breach of contract claim

Texas requires the usual elements: a valid contract, your own performance, the other party's breach and damages caused by it. They are set out in what you have to prove in a Texas breach of contract case. In an NDA case the contested elements are nearly always breach and damages.

Breach means proving disclosure or unauthorized use. Direct evidence is rare. The case is usually built from circumstances: a competitor's bid that matches your confidential pricing to the dollar, a product that appears with your unreleased feature, a former prospect's new supplier who is your former vendor, metadata in a document, or testimony from someone who saw the file. Discovery, including the recipient's emails and devices, is where most NDA cases are won or lost, which is why preserving your own records and sending a preservation demand early matter.

Damages are the loss the breach caused: a contract lost to a competitor who used your numbers, the development cost of information the recipient now has for free, the lower price you had to accept once a buyer knew your floor. Texas law requires reasonable certainty, not precision, but speculation fails. Because loss is hard to quantify, well-drafted NDAs often add a liquidated damages clause; whether it will be enforced depends on the rules in are liquidated damages clauses enforceable in Texas.

Attorney's fees are available on a contract claim. Section 38.001 of the Civil Practice and Remedies Code allows a person who prevails on a claim for an oral or written contract to recover reasonable attorney's fees from an individual or an organization, with narrow exceptions for governmental and charitable bodies. Many NDAs also have their own fee clause, which may run both ways.

Stopping further disclosure: injunctions

Money rarely undoes a disclosure, so the first filing in a serious case asks the court to stop it. Section 65.011 of the Civil Practice and Remedies Code authorizes an injunction where the applicant is entitled to the relief demanded and part of that relief is restraining an act prejudicial to the applicant, and where irreparable injury to property is threatened. A Texas court will grant a temporary injunction when the applicant shows a cause of action, a probable right to the relief it seeks and a probable, imminent and irreparable injury if the order is not entered.

Most NDAs contain a clause in which the recipient agrees that a breach would cause irreparable harm and that the disclosing party is entitled to injunctive relief. Courts treat such clauses as evidence of the parties' understanding, not as a substitute for proof, so the application still has to show a real and imminent threat with facts. The order itself must describe exactly what the defendant may not do, and the applicant must post a bond.

Does the NDA make it a trade secret?

No. A trade secret under the Texas Uniform Trade Secrets Act is information that derives independent economic value from not being generally known or readily ascertainable, and that the owner has taken reasonable measures to keep secret. An NDA is one of those reasonable measures, and a strong one, but it cannot make a trade secret out of information that is public, obvious or already shared widely without restriction. The definition is covered in what counts as a trade secret in Texas.

The distinction matters in both directions. Information that fails the trade secret test can still be protected by contract, which is the point of an NDA: it binds the recipient to confidentiality that general law would not impose. Information that passes the test gives you a second claim with better remedies.

Adding the trade secret claims

Under the Texas Act, chapter 134A of the Civil Practice and Remedies Code, misappropriation includes use or disclosure of a trade secret without consent by a person who knew it was acquired under a duty to maintain its secrecy. A recipient under an NDA is exactly such a person. Section 134A.003 allows the court to enjoin actual or threatened misappropriation; section 134A.004 allows damages measured by your loss, the recipient's unjust enrichment or a reasonable royalty, with exemplary damages of up to twice that for willful and malicious misappropriation; section 134A.006 requires the court to protect the secret during the case.

Section 134A.007 governs how the claims fit together. The Act displaces conflicting tort and restitutionary claims for misappropriation, so unjust enrichment or conversion pleaded over the same taking will likely be dismissed. It expressly does not affect contractual remedies, whether or not based on misappropriation of a trade secret. Your NDA claim therefore survives alongside the statutory one.

The federal Defend Trade Secrets Act, 18 U.S.C. § 1836, adds a federal claim when the trade secret relates to a product or service in interstate commerce, with the same injunction, damages, exemplary damages and fee provisions in substance. It is often the reason an NDA case lands in federal court.

The vendor's and partner's usual defenses

• It was not confidential under the agreement. Unmarked, oral, or outside the definition.
• It was already public or already known. Your own website, a trade show presentation or a prior deal disclosed it.
• We developed it independently. Contemporaneous development records decide this.
• We never used it. The similarity you see is coincidence or industry practice.
• No damages. You cannot tie any lost deal to the disclosure.
• You breached first. Unpaid invoices or your own disclosure of their information under a mutual NDA.

The strongest NDA cases anticipate these from the first letter, with the marked documents, the disclosure log and the timeline already assembled.

Example

Suppose a Dallas packaging manufacturer, negotiating to be acquired, gives a prospective buyer its customer list with volumes and margins under a mutual NDA that limits use to evaluating the transaction. The deal dies. Four months later the buyer's existing packaging subsidiary wins two of the manufacturer's top accounts with prices a few cents under the manufacturer's margin on each item. The manufacturer has a breach of contract claim on the use restriction without having to prove trade secret status, with fees under section 38.001. Because the list with margins is also a trade secret kept under access controls, it adds TUTSA and DTSA claims and asks for an injunction barring the subsidiary from using the data and requiring its return. The pricing match is circumstantial but strong; discovery of the subsidiary's bid files decides it. Damages are the lost margin on the two accounts over the period the court finds the information gave an advantage.

What to do in the first week

• Pull the signed NDA, every document you disclosed, and the record of when and how each was sent.
• Preserve your own evidence and send the other side a written demand to preserve theirs.
• Document the use you have observed with dates, screenshots and names.
• Quantify the exposure: what deals, customers or development are at risk.
• Decide, with counsel, between a demand letter and an immediate filing. Where disclosure is continuing, the filing often comes first.

The deadline for a written contract claim in Texas is four years, explained in how long you have to sue for breach of contract in Texas; the trade secret claims carry three years from discovery. Tina Wysk represents Dallas companies enforcing and defending confidentiality agreements and trade secret claims in state and federal court; the practice is described at trade secret litigation.