What Happens if you Break an NDA?

In March 2024, Apple accused one of its former engineers of leaking sensitive information to third parties, including details about unreleased products. That was a breach of the Non-Disclosure Agreement (NDA) the engineer had signed before joining. After nearly a year of legal back and forth, the ex-employee issued a public apology, and Apple dropped its charges.

He got off relatively easy. Not everyone does.

So what actually happens if you break an NDA? There's a fair range of consequences, whether you're an individual or a company, and we'll walk through all of it here: how enforcement plays out, how long these agreements actually last, and how you can legally get out of one if you need to. For the fundamentals, see our ultimate guide to NDAs.

Is it a crime to violate an NDA?

An NDA is a civil contract, so breaking one isn't generally a criminal offense. If you violate one, the other party, usually an employer or business partner, can sue you for damages or seek an injunction to stop further disclosure.

That said, a few scenarios push things into criminal territory:

• If a court has already issued an injunction and you violate it, that's contempt of court, which can carry criminal penalties
• If the NDA relates to a government or military contract, breaking it might be treated as espionage or a national security violation
• If you use protected information to do something like insider trading, you're now facing criminal exposure on top of the NDA breach itself

How long does an NDA last?

This depends entirely on what the NDA says. Most agreements specify a term, anywhere from one to five years, which is common in commercial deals, after which the confidentiality obligation expires. Some NDAs tie the term to a specific event instead, like the end of an employment relationship or the close of a business deal.

Trade secrets are the exception. Since trade secret protection under laws like the Defend Trade Secrets Act doesn't have a built-in expiration, an NDA covering genuine trade secrets can effectively last indefinitely, as long as the information stays confidential. That's part of why it matters to spell out exactly what's covered and for how long. A vague NDA that never mentions a term is harder to enforce and easier to challenge later, which is worth double-checking whenever you're reviewing one, see our NDA review checklist for what to look for.

Requirements for a valid NDA

An NDA exists to protect trade secrets, intellectual property, and other confidential information, but it only holds up in court if it actually meets a few basic requirements. It needs to spell out what counts as confidential, whether that's a customer list, product designs, or something else, and ideally clarify what doesn't count too, so there's no ambiguity later.

It should also name the disclosing party and the receiving party clearly, and many teams add a non-use policy so that even if information leaks, third parties can't benefit from it. Beyond that, a solid NDA explains what can and can't be done with the information, how long it needs to stay confidential, what happens if someone breaks it, and which state or country's law governs any dispute. A mutual NDA needs this on both sides; a unilateral NDA only on one.

What NDA violations actually look like

A few realistic examples: an employee taking a client list to a new job at a competitor, a contractor sharing unreleased product specs on social media, a business partner disclosing deal terms during unrelated fundraising conversations, or a vendor reusing your proprietary process in a pitch to someone else. Some of these are careless rather than malicious, but that rarely changes the legal exposure.

Penalties for violating an NDA

If you break an NDA, the other party can take legal action, and if a court finds against you, the penalties usually fall into a few buckets.

Financial damages come first. If the breach caused measurable monetary loss, lost business, lost customers, or a weakened competitive position, the court can order you to pay for it, sometimes including the cost of fixing the damage. Some NDAs also include liquidated damages, a predetermined penalty amount written directly into the contract. That's different from financial damages, which a court calculates after the fact based on actual impact. Then there's legal costs. Courts sometimes make the breaching party cover both sides' legal fees, which adds up fast in drawn-out litigation. 

The non-legal consequences

Legal penalties aren't the only thing at stake. Companies take NDA violations seriously, and getting caught disclosing protected information to the wrong people can cost you your job, sometimes making it harder to land the next one too.

Reputation takes a hit as well. Word travels fast in most industries, and once you're known as someone who doesn't keep confidential information confidential, employers hesitate, clients pull back, and partners quietly move on. For a business, that can also mean losing your competitive edge outright. If competitors get their hands on your leaked pricing, supplier relationships, or product roadmap, they'll use it, and that can set a company back years.

Can you break an NDA to report a crime?

Generally, yes, and this is one of the more misunderstood parts of NDA law. Under the federal Defend Trade Secrets Act, whistleblowers who disclose trade secrets to government officials or in a court filing, specifically to report or investigate a suspected violation of law, are immune from liability, even if the NDA technically prohibits the disclosure. Most modern NDAs and employment agreements are now required to include notice of this immunity.

That protection is narrow, though. It covers disclosures made to the right people, for the right purpose, under seal or in confidence. It doesn't give you a blanket excuse to disclose confidential information publicly just because you believe something illegal happened somewhere in the company. If you're in this situation, talk to a lawyer before you act, not after.

How to get out of an NDA

Maybe the NDA feels too restrictive now, or your situation has changed. A few paths exist.

Start by rereading it carefully. Check whether it has a fixed term that's already run out, and look at how broadly it's written. Vague or overly broad language sometimes gives you room to challenge it. Also check the termination conditions; some NDAs release you automatically once the covered information becomes public knowledge.

If none of that applies, the simplest route is just asking. If the NDA no longer serves a purpose for either side, the other party can release you from it in writing, which is common when a deal falls through or a partnership ends amicably.

You can also argue the information isn't actually confidential anymore; if it's in the public domain, something you already knew before signing, or something someone else discovered independently, the NDA likely doesn't cover it. Our guide on reviewing non-disclosure agreements walks through how to spot these gaps.

And in extreme cases, you can challenge the NDA in court. Grounds include the agreement blocking you from working in your industry entirely, connecting to illegal activity, or being signed under pressure without a real chance to review it.

How to enforce an NDA

Say a supplier just leaked your unreleased product specs and manufacturing costs to a third party. Now what?

"Core to any strategy to maintain trade secrets is ensuring you have several key agreements in place and that you regularly review and update those documents as circumstances warrant. Courts will want to see such agreements in place as part of its analysis of whether the company took the proper steps to maintain confidentiality."
~Sterling Miller, CEO and Senior Counsel, Hilgers Graben PLLC

Start by gathering evidence of what was leaked, who leaked it, and who has access now. Emails, messages, and anything documented strengthen your position. Then contact the person or company responsible and find out whether it was accidental or intentional; that distinction usually determines whether a cease-and-desist resolves things or you need to escalate.

Next, evaluate the actual damage. Has it put the business at serious risk, or is it manageable? Depending on severity, you might need to renegotiate contracts, find new suppliers, or issue a statement to reassure customers and partners.

If the harm is serious enough, legal action follows. A court can issue an injunction to stop further disclosure and order compensation for damages. If your NDA included a non-use policy, you can also pursue third parties who benefited from the leak.

Whatever the outcome, use it to tighten future NDAs. Revisit your confidentiality clause language, get more specific about what counts as confidential, and add a non-use policy if you haven't already. Our NDA negotiation playbook template is a decent starting point for standardizing this across future agreements.

How to respond to an NDA violation claim

If you're on the receiving end of an accusation, resist the urge to respond immediately, especially in writing. Anything you say can be used against you later. Stay quiet except to your lawyer while you sort out what actually happened.

From there, let your lawyer analyze the NDA you're accused of breaching. They might find the language too vague or overly restrictive to hold up, or discover the information you shared was already public or fell under an exception.

Where possible, work toward a resolution before things escalate into full litigation. Often the other side cares more about protecting their information going forward than punishing you, and a lawyer can help find common ground, whether that's clarifying a misunderstanding, pushing back on a weak claim, or negotiating a fair settlement.

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