California Mutual Non-Disclosure Agreement
California enforces confidentiality agreements, but it voids almost any clause that restrains a person from working or doing business. A California mutual NDA has to protect information without turning into a non-compete. Its trade secret terms operate under the California Uniform Trade Secrets Act.
What California law does to this document
Restraints on trade are void
Every contract that restrains anyone from engaging in a lawful profession, trade or business is void to that extent. The statute tells courts to read that rule broadly, and since January 1, 2024 it applies even when the restrained person is not a party to the contract. A confidentiality clause is not a restraint on its face, but an NDA that bars a party from working with competitors is exposed to this rule.
Cal. Bus. & Prof. Code § 16600Business-to-business restraints get a rule of reason
In 2020 the California Supreme Court held that a rule of reason applies to a contract term that restrains one business from dealing with another business. Outside employment, the question is whether the restraint is reasonable in purpose and effect. That is the standard for an exclusivity or no-dealing term between two companies in an NDA.
Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130Non-solicitation of employees is risky when an individual signs
A Court of Appeal held that a clause barring former employees from soliciting their old employer's staff was void under section 16600. If one party to the NDA is an individual, such as a job candidate or a consultant, a covenant not to solicit employees faces that holding. The generator's non-solicitation clause is optional.
AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923What counts as a trade secret
California protects information that has independent economic value because it is not generally known and that is the subject of reasonable efforts to keep it secret. A signed NDA is one of those efforts. A claim for misappropriation must be brought within three years after the misappropriation is discovered or should have been discovered.
Cal. Civ. Code §§ 3426.1(d), 3426.6Trade secrets must be identified before discovery
In a California trade secret lawsuit, the party claiming misappropriation must identify the trade secret with reasonable particularity before discovery on it begins. An NDA that describes the categories of information exchanged, backed by a record of what was actually disclosed, makes that step easier.
Cal. Code Civ. Proc. § 2019.210An NDA cannot silence testimony
A contract term entered into on or after January 1, 2019 is void if it waives a party's right to testify about alleged criminal conduct or sexual harassment by the other party when the testimony is required by court order, subpoena or a written request from an agency or the Legislature. Separately, federal law (18 U.S.C. § 1833(b)) protects confidential trade secret disclosures to the government or in sealed court filings, and the generator's NDA carries that federal notice.
Cal. Civ. Code § 1670.11Where people go wrong in California
- Adding a non-compete or a ban on working with competitors to an NDA, which section 16600 voids.
- Copying an employee non-solicitation clause from another state's form into an NDA that an individual will sign.
- Describing confidential information so loosely that the trade secrets cannot later be identified with the particularity Code of Civil Procedure section 2019.210 requires.
How the generator works
Protect confidential information in both directions before a partnership, deal, or hire conversation. Answer a short interview and the draft assembles as you go, with California already set as the governing state. Download it as PDF or Word. No fee. No account.