What does our NDA add in New Jersey, and what can it not cover?
The New Jersey Trade Secrets Act's rights, remedies and prohibitions are IN ADDITION TO and cumulative of any other right, remedy or prohibition under New Jersey common or statutory law, and nothing in the Act denies, abrogates or impairs them, except that the Act supersedes conflicting tort, restitutionary and other New Jersey law providing civil remedies for misappropriation of a trade secret, and that against a public entity or public employee the Tort Claims Act supersedes conflicting provisions of the Act (§ 56:15-9(c)). Before the Act, the Supreme Court held that information need not rise to the level of a trade secret to be protected (Lamorte Burns, a duty-of-loyalty and tortious-interference case). The Act itself defines what it supersedes other law FOR: "misappropriation" is acquisition by one who knows or has reason to know the secret was acquired by improper means, or disclosure or use without consent by one who used improper means, knew the knowledge was derived through them, or knew before a material change of position; "improper means" includes breach or inducement of a breach of an express or implied duty of secrecy and unauthorized access; and "proper means" (which answer an improper-means allegation, though § 56:15-5 bars a misappropriator from defending on the ground that proper means merely existed) include independent invention and reverse engineering, which § 56:15-2 limits to a known product whose acquisition was lawful (§§ 56:15-2, 56:15-5). A complainant recovers actual loss and unjust enrichment or a reasonable royalty, and for wilful and malicious misappropriation punitive damages up to twice the award (§ 56:15-4); fees and expert costs go to the prevailing party for wilful and malicious misappropriation or a bad-faith claim (§ 56:15-6); and the action must be brought within three years of actual or constructive discovery, a continuing misappropriation being one claim (§ 56:15-8). On the employment side, § 10:5-12.7 separately voids any provision in an employment contract that waives a substantive or procedural right or remedy relating to a discrimination, retaliation or harassment claim, except in a collective bargaining agreement (§ 10:5-12.7(c)), and bars prospective waiver of any right under the Law Against Discrimination.
The trap
Read the savings clause carefully: § 56:15-9 preserves other law but supersedes conflicting 'tort, restitutionary, and other law ... providing civil remedies for misappropriation of a trade secret'. The statute does not name contract remedies either way; that an NDA claim survives the Act is a reading of subsection (a), not something this rule verified from a court. The New Jersey-specific limit on the NDA itself runs the other way from the usual instinct to draft the clause as broadly as possible: a provision in any employment contract OR SETTLEMENT AGREEMENT whose purpose or effect is to conceal the details of a claim of discrimination, retaliation or harassment is against public policy and unenforceable against the employee, and if the employee publicly reveals enough detail to make the employer reasonably identifiable, it becomes unenforceable against the EMPLOYER too. Every such settlement must carry a bold, prominently placed notice saying so (§ 10:5-12.8(b)). The statute expressly declines to prohibit two things a drafter can still require: a non-compete, and an agreement not to disclose proprietary information, which it defines as only non-public trade secrets, business plan and customer information (§ 10:5-12.8(c)). And enforcing, or attempting to enforce, a provision § 10:5-12.7 voids makes the enforcing person liable for the employee's reasonable attorney fees and costs (§ 10:5-12.9).
15 authorities
- statuteN.J. Stat. Ann. § 56:15-9enactment date not established
The words that state the rule
9. a. The rights, remedies and prohibitions provided under this act are in addition to and cumulative of any other right, remedy or prohibition provided under the common law or statutory law of this State and nothing contained herein shall be construed to deny, abrogate or impair any common law or statutory right, remedy or prohibition except as expressly provided in subsection b. of this section. b. This act shall supersede conflicting tort, restitutionary, and other law of this State providing civil remedies for misappropriation of a trade secret. c. In any action for misappropriation of a trade secret brought against a public entity or public employee, the provisions of the "New Jersey Tort Claims Act" (N.J.S.59:1-1 et seq.) shall supersede any conflicting provisions of this act.
- statuteN.J. Stat. Ann. § 10:5-12.8enactment date not established
The words that state the rule
A provision in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment (hereinafter referred to as a "non-disclosure provision") shall be deemed against public policy and unenforceable against a current or former employee (hereinafter referred to as an "employee") who is a party to the contract or settlement. If the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable, then the non-disclosure provision shall also be unenforceable against the employer.
The words that state the rule
Importantly, however, information need not rise to the level of a trade secret to be protected. In Platinum Management, Inc. v. Dahms, 285 N.J.Super. 274, 295 , 666 A.2d 1028 (Law Div.1995), the court held that to be legally protected, the information need not constitute a trade secret, and indeed, may otherwise be publicly available. The key to determining the misuse of information is the relationship of the parties at the time of disclosure and the intended use of the information.
- statuteN.J. Stat. Ann. § 56:15-2enactment date not established
The words that state the rule
"Misappropriation" means: (1) 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 (2) Disclosure or use of a trade secret of another without express or implied consent of the trade secret owner by a person who: (a) used improper means to acquire knowledge of the trade secret; or (b) at the time of disclosure or use, knew or had reason to know that the knowledge of the trade secret was derived or acquired through improper means; or (c) before a material change of position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired through improper means.
- statuteN.J. Stat. Ann. § 56:15-2enactment date not established
The words that state the rule
"Proper means" means discovery by independent invention, discovery by reverse engineering, discovery under a license from the owner of the trade secret, observation of the information in public use or on public display, obtaining the trade secret from published literature, or discovery or observation by any other means that is not improper. "Reverse engineering" means the process of starting with the known product and working backward to find the method by which it was developed so long as the acquisition of the known product was lawful or from sources having the legal right to convey it, such as the purchase of the item on the open market.
- statuteN.J. Stat. Ann. § 56:15-2enactment date not established
The words that state the rule
"Improper means" means the theft, bribery, misrepresentation, breach or inducement of a breach of an express or implied duty to maintain the secrecy of, or to limit the use or disclosure of, a trade secret, or espionage through electronic or other means, access that is unauthorized or exceeds the scope of authorization, or other means that violate a person's rights under the laws of this State.
- statuteN.J. Stat. Ann. § 56:15-4enactment date not established
The words that state the rule
4. a. Except to the extent that circumstances, including a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation renders a monetary recovery inequitable, a complainant is entitled to recover damages for misappropriation. Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret. b. If willful and malicious misappropriation exists, the court may award punitive damages in an amount not exceeding twice any award made under subsection a. of this section.
- statuteN.J. Stat. Ann. § 56:15-6enactment date not established
The words that state the rule
The court may award to the prevailing party reasonable attorney's fees and costs, including a reasonable sum to cover the service of expert witnesses, if: a. willful and malicious misappropriation exists; b. a claim of misappropriation is made in bad faith; or c. a motion to terminate an injunction is made or resisted in bad faith. For purposes of this section, "bad faith" is that which is undertaken or continued solely to harass or maliciously injure another, or to delay or prolong the resolution of the litigation, or that which is without any reasonable basis in fact or law and not capable of support by a good faith argument for an extension, modification or reversal of existing law.
- statuteN.J. Stat. Ann. § 56:15-8enactment date not established
The words that state the rule
An action for misappropriation shall be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered. For the purposes of this section, a continuing misappropriation constitutes a single claim.
- statuteN.J. Stat. Ann. § 10:5-12.8enactment date not established
The words that state the rule
b. Every settlement agreement resolving a discrimination, retaliation, or harassment claim by an employee against an employer shall include a bold, prominently placed notice that although the parties may have agreed to keep the settlement and underlying facts confidential, such a provision in an agreement is unenforceable against the employer if the employee publicly reveals sufficient details of the claim so that the employer is reasonably identifiable. c. Notwithstanding any other provision of law to the contrary, this section shall not be construed to prohibit an employer from requiring an employee to sign an agreement: (1) in which the employee agrees not to enter into competition with the employer during or after employment; or (2) in which the employee agrees not to disclose proprietary information, which includes only non-public trade secrets, business plan and customer information.
- statuteN.J. Stat. Ann. § 10:5-12.7enactment date not established
The words that state the rule
a. A provision in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation, or harassment shall be deemed against public policy and unenforceable. b. No right or remedy under the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.) or any other statute or case law shall be prospectively waived. c. This section shall not apply to the terms of any collective bargaining agreement between an employer and the collective bargaining representative of the employees.
The words that state the rule
We conclude, therefore, that the client claim file information taken by defendants was confidential and proprietary information belonging to plaintiff.
The words that state the rule
Accordingly, the judgment of the Appellate Division is reversed, in part, and the judgment of the Chancery Division sustaining plaintiffs tort claims is reinstated.
- statuteN.J. Stat. Ann. § 56:15-5enactment date not established
The words that state the rule
5. A person who misappropriates a trade secret shall not use as a defense to the misappropriation that proper means to acquire the trade secret existed at the time of the misappropriation.
- statuteN.J. Stat. Ann. § 10:5-12.9enactment date not established
The words that state the rule
3. A person who enforces or attempts to enforce a provision deemed against public policy and unenforceable pursuant to P.L.2019, c.39 (C.10:5-12.7 et seq.) shall be liable for the employee's reasonable attorney fees and costs.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.