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Protecting proprietary information in North Carolina

On Behalf of | Aug 12, 2020 | Business Law

Many North Carolina businesses possess information that they regard as both secret and the property of the company. These businesses naturally want to prevent this information from falling into the hands of competitors. North Carolina corporate law provides two basic methods for accomplishing this goal: the use of non-disclosure agreements (NDA) or reliance on the state’s trade secret act. Each option has its own advantages.

The Trade Secret Act

The state’s trade secret act provides a very broad definition of “trade secret” but there are instances that the act does not reach. The statute defines “trade secret” as any “business or technical information” that “derives independent actual or potential commercial value from not being generally known. . . .” The information that is protected can consist of “a formula, pattern, program, device, compilation of information, method, technique, or process.” This definition is intended to be very broad, but it may not include market or research information compiled by the company regarding its customers.


The principal advantage of non-disclosure agreements is that they can be crafted to fit a unique situation that may not fit within the statutory definition. In order to be effective, NDAs must be in writing and signed by all parties. The key sections in and NDA include a description of the confidential information, a description of the parties’ obligations to maintain the confidentiality of the information and an enumeration of the various remedies if the agreement is breached.

The long view

Any business owner who believes that his company possesses information that should remain confidential may wish to consult an experienced corporate attorney to review the nature and status of this information. A knowledgeable attorney can provide advice on whether the information can be protected under the North Carolina trade secret act or a non-disclosure agreement and can draft the documents that are necessary to protect the information under either alternative.