NDA: United States vs United Kingdom — Key Differences

Non-disclosure agreements serve as the primary contractual mechanism for protecting confidential information in both the United States and the United Kingdom. Despite sharing common legal heritage, the two jurisdictions have developed markedly different approaches to confidentiality protection — the US relying heavily on statutory frameworks, while the UK maintains a predominantly common law and equitable foundation.

Statutory Framework vs Common Law Tradition

United States: A Dual-Layer Statutory Approach

The US provides trade secret protection through two complementary statutory layers. At the state level, the Uniform Trade Secrets Act (UTSA) has been adopted by 48 states and the District of Columbia, creating substantial (though not complete) uniformity. The UTSA defines trade secrets broadly, covering information that derives independent economic value from not being generally known and is subject to reasonable efforts to maintain its secrecy.

At the federal level, the Defend Trade Secrets Act of 2016 (DTSA) added a powerful overlay, allowing trade secret owners to bring civil actions in federal court. The DTSA introduced the controversial ex parte seizure provision under 18 U.S.C. 1836(b)(2), permitting courts to order the seizure of property to prevent trade secret dissemination in extraordinary circumstances. The DTSA also includes a mandatory whistleblower immunity notice that must be included in any contract governing trade secrets with an employee or contractor, as set out in 18 U.S.C. 1833(b).

State variations create important nuances. California stands apart by refusing to enforce non-compete agreements under Business and Professions Code Section 16600, which significantly affects NDA drafting — California NDAs must be carefully crafted to protect confidential information without functioning as de facto non-competes. New York and Washington have enacted restrictions on NDAs that would prevent disclosure of sexual harassment claims, reflecting a post-MeToo legislative trend.

United Kingdom: Equitable Doctrine and Modern Regulation

The UK framework rests on the equitable doctrine of breach of confidence, crystallized in the landmark case Coco v. A.N. Clark Engineers Ltd (1969). Megarry J established a three-part test: the information must have the necessary quality of confidence, it must have been imparted in circumstances importing an obligation of confidence, and there must be an unauthorized use of that information to the detriment of the party communicating it.

The Trade Secrets (Enforcement, etc.) Regulations 2018 implemented EU Directive 2016/943 into UK law, surviving Brexit through retained EU law provisions. These regulations supplemented the common law by providing a statutory definition of trade secrets aligned with the TRIPS Agreement, establishing specific limitation periods, and introducing provisions for the preservation of trade secret confidentiality during litigation.

Post-Employment Restrictions and Restrictive Covenants

The US Approach

US courts evaluate post-employment NDAs under reasonableness standards that vary by state. The inevitable disclosure doctrine, recognized in PepsiCo Inc. v. Redmond (7th Cir. 1995), allows employers in some states to obtain injunctive relief by demonstrating that a former employee would inevitably use or disclose trade secrets in new employment. However, this doctrine is rejected in several states, including California, and has been criticized for effectively creating judicial non-competes.

The UK Approach

UK law draws a clear distinction between confidential information protectable during employment versus after employment. The Court of Appeal in Faccenda Chicken Ltd v. Fowler (1987) established that only trade secrets and information of a sufficiently high degree of confidentiality survive the employment relationship absent express contractual provisions. Lower-grade confidential information is only protectable during the employment period.

Restrictive covenants in UK NDAs must satisfy the Nordenfelt test from Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co (1894) — the restraint must be reasonable in the interests of the parties and in the interests of the public. Courts will not rewrite an unreasonable covenant to make it enforceable; the entire provision fails. This contrasts with some US jurisdictions that permit judicial blue-penciling.

The springboard doctrine, established in Terrapin Ltd v. Builders Supply Co (Hayes) Ltd (1967), provides an additional remedy unique to UK law. Even where confidential information has entered the public domain, a court may grant an injunction for a limited period to prevent the wrongdoer from gaining a head start over competitors who did not misuse confidential information.

Garden leave provisions are far more established in UK practice, allowing employers to require departing employees to remain employed (and bound by implied duties of fidelity) during their notice period while not attending work.

Remedies and Enforcement

The remedies available differ significantly between jurisdictions.

In the US, the DTSA and UTSA provide for:

• Injunctive relief (though the DTSA prohibits injunctions that would prevent employment based solely on information the person knows)
• Damages including actual loss and unjust enrichment
• Exemplary damages up to twice the award for willful and malicious misappropriation
• Attorney fees in cases of bad faith or willful misappropriation

In the UK, the equitable origin of breach of confidence actions provides a broader remedial palette:

• Injunctions (interim and final)
• Damages (assessed on various bases including Wrotham Park negotiating damages)
• Account of profits (an equitable remedy requiring the defendant to disgorge profits made through misuse of confidential information)
• Delivery up or destruction of confidential materials
• Constructive trust over assets acquired through misuse of confidential information

The account of profits remedy is particularly significant as it focuses on the defendant's gain rather than the claimant's loss, which can produce substantially larger awards where the misappropriator has been commercially successful.

Whistleblower Protections

Both jurisdictions carve out protections for disclosures made in the public interest, but through different mechanisms.

The US DTSA includes an express immunity provision (18 U.S.C. 1833(b)) protecting individuals who disclose trade secrets in confidence to government officials or attorneys for the purpose of reporting suspected legal violations. The Dodd-Frank Wall Street Reform Act provides broader whistleblower protections, including financial incentives for reporting securities violations to the SEC.

The UK relies on the Public Interest Disclosure Act 1998 (PIDA), which inserted Part IVA into the Employment Rights Act 1996. PIDA protects workers who make qualifying disclosures about criminal offences, failures to comply with legal obligations, miscarriages of justice, dangers to health and safety, environmental damage, or deliberate concealment of information relating to any of these categories. Any NDA provision that conflicts with PIDA protections is void.

Duration and Scope Considerations

US NDAs commonly specify confidentiality periods of two to five years for general business information, with indefinite protection for trade secrets. Courts generally uphold these durations provided they are tied to the nature of the information protected. The Restatement (Third) of Unfair Competition supports protection lasting as long as the information retains its trade secret status.

UK courts are more willing to strike down NDAs with unreasonable durations, particularly where the information is unlikely to retain its confidential character over the specified period. The court in Thomas v. Farr plc (2007) emphasized that temporal limitations must be justified by reference to the legitimate interest being protected.

Practical Guidance for Cross-Border NDA Drafting

When drafting NDAs that must function across both jurisdictions, several strategies help ensure enforceability:

• Include severability clauses that allow courts to enforce valid portions even if specific provisions fail under one jurisdiction's law
• Define confidential information broadly but with specific categories, satisfying both the UTSA definition and the Coco v. Clark quality of confidence requirement
• Specify governing law and jurisdiction, recognizing that US courts may not enforce provisions that would violate local public policy
• Include the DTSA whistleblower notice for any agreement with US-based personnel
• Draft restrictive covenants with cascading provisions to accommodate the UK Nordenfelt reasonableness test
• Address data protection obligations under both regimes, as the UK GDPR imposes obligations that may affect how personal data within confidential information is handled
• Consider separate schedules or annexes tailored to each jurisdiction rather than attempting a single set of provisions that must satisfy both legal systems simultaneously