On Nondisclosure Agreements and Societal Harm

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

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2 Responses

  1. Lawrence Cunningham says:

    B has a lousy case to claim contract damages, though I’d put this on the grounds that it is highly unlikely to meet the requirement of proving expectancy or reliance losses with reasonable certainty. Of what bargain has B lost a benefit and what is the value of that disappointed interest? Reliance losses may be the hour spent talking. I’d award nominal damages, about six cents. See Freund v. Washington Square Press.

  2. A.J. Sutter says:

    This is off your main point, but I’d like to question your statement, “The strongest case for damages after breach of an NDA arises in the trade secret context, where we assume that the property right is necessary to spur investment. That’s why explicit contractual protection is only sometimes necessary.”

    First, I’m confused by the second sentence in this quote. To what contractual protection are you referring? By hypothesis, there is an NDA. What exactly is not being made explicit in that agreement? If you mean that trade secrets can be protected in the absence of an NDA, then, yes — but that’s a non sequitur with your reference to breach of an NDA. Please clarify.

    Second, why is the assumption about property and investment necessary? When the measure of damages is lost profits, the theory can be compensation, not a policy to incentivize to invest. When the measure of damages is a royalty, the theory can be unjust enrichment. This incentive-to-invest rationalization seems like an L&E “just-so story,” and ignores that courts have awarded damages for misappropriation of trade secrets since long before economic theories percolated into the judiciary.