What makes an NDA clause unenforceable?

An NDA clause is typically unenforceable if it lacks reasonable geographic or temporal limits, fails to define 'confidential' with sufficient specificity, or attempts to classify non-proprietary information as trade secrets.

How does the Defend Trade Secrets Act (DTSA) affect NDAs?

The DTSA provides immunity for whistleblowers who disclose trade secrets in confidence to government officials or attorneys for the purpose of reporting a violation of law, and requires employers to provide notice of this immunity in employment agreements.

A TermScore is an AI-generated risk rating from 0 to 100 that evaluates the fairness and risk level of any legal document. A score of 86-100 means the contract is highly favorable, while 0-30 indicates dangerous terms you should walk away from.

What types of documents can TermScore analyze?

TermScore analyzes any legal document including freelance contracts, employment agreements, residential leases, NDAs, brand sponsorship deals, SaaS vendor agreements, and rental applications. Upload PDFs, Word documents, or images.

How much does TermScore cost?

TermScore offers a free plan with 3 scores per month. The Team plan is $15/month for 30 scores, and the Professional plan is $50/month for 500 scores with team collaboration features.

Is my document data secure?

Yes. Documents are processed in memory and analysis results are stored encrypted. TermScore never shares your document data with third parties and you can delete your data at any time from your dashboard.

Are there limits on what an employer can define as proprietary information in an NDA?

Yes. Employers cannot define publicly available information, general industry knowledge, or an employee's pre-existing skills as proprietary. Courts routinely invalidate NDAs that are overly broad, vague, or attempt to restrict an employee's right to earn a living using their general professional expertise.

Key takeaway: An NDA is not a blanket tool for secrecy; it must be narrowly tailored to protect legitimate business interests, such as specific trade secrets or unique client lists, rather than general job knowledge.

The Legal Boundaries of "Proprietary Information"

Courts apply a "reasonableness" test to determine if a definition of proprietary information is enforceable. If a definition is so broad that it encompasses everything an employee learns on the job, it is often viewed as an illegal restraint on trade.

What Cannot Be Protected

General Knowledge: Skills, experience, and methodologies acquired during the course of employment that are standard in the industry.
Public Domain: Information that is already available to the public or competitors through legal means.
Employee's Own Work: Work products that do not rely on the employer's specific, non-public trade secrets.
Whistleblower Disclosures: Information shared with government agencies regarding illegal activity, which is protected under the Defend Trade Secrets Act (DTSA).

Action Item: Review your NDA for a "carve-out" section. If the definition of confidential information does not explicitly exclude information that is "generally known to the public," it is likely overbroad.

Comparison: Enforceable vs. Unenforceable Definitions

Feature	Enforceable Definition	Unenforceable Definition
Scope	Specific trade secrets, proprietary software code, unique client lists.	"Everything learned during employment" or "all business information."
Duration	Limited to the life of the trade secret or a reasonable term (e.g., 2-5 years).	"Perpetual" or "indefinite" without clear justification.
Clarity	Clearly defined categories of protected data.	Vague, catch-all phrases like "any and all information."

Red Flags in NDA Drafting

When analyzing an NDA, look for these common indicators that the employer is overreaching:

The "Everything is Confidential" Clause: If the contract fails to distinguish between sensitive trade secrets and routine operational emails, it is legally suspect.
Lack of Temporal Limits: While trade secrets can be protected indefinitely, other business information should have a sunset clause.
Geographic Overreach: If the NDA attempts to restrict your ability to work in regions where the employer does not even operate, it may be deemed an unreasonable restraint on trade.
Failure to Provide DTSA Notice: Under the DTSA, if an employer fails to provide notice of whistleblower immunity, they may be barred from recovering exemplary damages or attorney fees in a trade secret lawsuit.

Action Item: If you identify these red flags, consult with legal counsel to determine if the contract is voidable in your specific jurisdiction, such as California, where non-compete and overbroad NDA clauses face strict scrutiny.

The Role of Jurisdiction

State laws vary significantly regarding the enforcement of NDAs. For example, California Business and Professions Code Section 16600 generally prohibits contracts that restrain anyone from engaging in a lawful profession. While NDAs are not non-competes, California courts will strike down an NDA if it functions as a de facto non-compete by preventing an employee from using their general knowledge at a new job.

Identify the Governing Law: Check the "Choice of Law" clause in your contract.
Research State Precedent: Determine if your state follows the "Blue Pencil" rule (where courts can edit an overbroad contract) or the "All-or-Nothing" rule (where the entire contract is voided).
Assess Public Policy: Evaluate if the NDA violates the public policy of the state where you are physically performing the work.

Action Item: Always verify the governing law clause. An NDA signed in New York may be interpreted differently than one signed in Texas, even if the language is identical.

How TermScore Simplifies Contract Analysis

Manually auditing NDAs for overbroad definitions is time-consuming and prone to human error. TermScore uses advanced AI to instantly flag vague definitions, missing carve-outs, and clauses that conflict with current labor laws, allowing you to identify risks in seconds rather than hours.