A Brisbane hardware founder spends eight months pitching a distribution deal to an established manufacturer. Before the first meeting, both sides sign the founder’s NDA — a template downloaded years ago, defining “Confidential Information” as “all information disclosed by or on behalf of the Discloser, in any form, whether before or after the date of this agreement.” The deal falls over. Ten months later the manufacturer launches a product with a familiar-looking mechanism. The founder’s lawyer reads the NDA and starts asking uncomfortable questions. Which specific information was taken? The founder gestures at the whole pitch deck. Wasn’t the mechanism visible in the crowdfunding video that has been on YouTube since last spring? And the complete patent application that followed the provisional — hasn’t that now been published? By the end of the meeting the founder has learned the uncomfortable truth: a signed NDA is not a force field. It is a contract, and Australian courts have repeatedly declined to enforce confidentiality obligations that are vague, overbroad, or aimed at information that was never really secret.
That does not make NDAs pointless — far from it. It means the protection lives in the drafting and the discipline around it, not in the signature. Here is how confidentiality obligations actually work in Australia, the ways they fail in court, and what founders should do differently.
There Is No Trade Secrets Act — Just Contract and Equity
Unlike the United States, with its Defend Trade Secrets Act and state Uniform Trade Secrets Act statutes, Australia has no civil trade secrets statute — the only legislative incursion is a narrow Criminal Code offence aimed at theft of trade secrets on behalf of foreign governments. Confidential information here is protected by two overlapping regimes: contract (your NDA or confidentiality clause) and the equitable action for breach of confidence, whose modern elements derive from Coco v A N Clark (Engineers) Ltd [1969] RPC 41 and were endorsed by the High Court in Moorgate Tobacco Co Ltd v Philip Morris Ltd (No 2) (1984) 156 CLR 414. Equity protects information that is identified with specificity, has the necessary quality of confidence, and was received in circumstances importing an obligation of confidence, against actual or threatened misuse.
The equitable action matters for two reasons. First, it can protect you even without a signed NDA — a pitch given in obviously commercial-in-confidence circumstances can bind the recipient in equity. Second, it sets the baseline the courts bring to your contract: judges are accustomed to asking what exactly is the information, and is it actually confidential? — and an NDA does not excuse you from answering.
Failure Mode 1: You Cannot Say What the Information Is
Courts enforce confidentiality by injunction, and an injunction must tell the defendant precisely what they cannot use. In O’Brien v Komesaroff (1982) 150 CLR 310, the High Court refused relief where the claimant could not point to specific confidential content — a generalised description of the information, Mason J held, “does not identify the information and enable the Court to formulate an order”: one needs to know not only what was conveyed, but what part of it was not common knowledge. A definition that sweeps in “all information disclosed” feels protective when you sign it; in litigation it forces you to reconstruct, document by document, what was disclosed, when, and what part of it was genuinely secret. Startups that disclose in unstructured ways — a call here, a demo there, a data room that changed weekly — often cannot.
Failure Mode 2: The Information Was Not Actually Secret
The leading Australian authority on failed NDAs is the High Court’s decision in Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70. An inventor disclosed his fold-away ironing board design to Hafele under confidentiality deeds obliging Hafele not to use the information “at any time hereafter.” But the design had been displayed at a trade show, and the inventor’s own patent applications were later published, putting the information into the public domain. The majority held that a contractual promise to treat publicly available information as confidential forever operated as an unreasonable restraint of trade and was unenforceable in that respect. The lesson cuts deep for founders: the act of patenting, crowdfunding, demoing at a pitch night or shipping a product can gut the confidentiality your NDA assumes — and drafting around it with “even if public” language invites restraint-of-trade scrutiny rather than avoiding it.
Failure Mode 3: Employees, Ex-Employees and the Know-How Problem
The hardest cases involve departing team members. Once employment ends, the law distinguishes between an employer’s trade secrets — which remain protected — and the general skill, knowledge and know-how the employee acquired on the job, which they are free to take to a competitor. In Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172, the NSW Court of Appeal declined to stop former employees using the identity of the company’s secret Italian stone supplier: the information had merged into their general know-how and could not fairly be severed from it. The factors courts weigh were canvassed in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 — among them the skill and effort expended to develop the information, how closely the employer actually guarded it, whether the employee was plainly told it was confidential, how widely it is known outside the business, and its value to the employer and competitors. A confidentiality clause purporting to lock up everything an employee ever learned is liable to be read down or treated as an unenforceable restraint; what holds up is a clause targeted at genuinely secret, identifiable material, backed by real security practices.
Failure Mode 4: Process Failures That Have Nothing to Do With Drafting
A depressing share of NDA disputes are lost on mechanics rather than doctrine:
- Wrong parties. The NDA names the recipient’s holding company; the disclosure went to engineers employed by a subsidiary — with no clause obliging the recipient to bind its personnel and related entities.
- Disclosure before signature. Information handed over before the contract exists is not obviously covered, and past disclosure is not consideration for a later promise. Executing the NDA as a deed — which requires no consideration — and expressly covering prior disclosures fixes both problems.
- Marking requirements you don’t follow. Many templates protect only information marked “Confidential” or confirmed in writing within 30 days. Startups almost never do this. If your NDA has a marking regime, either follow it religiously or remove it.
- US-template bleed. Imported forms carrying Delaware governing law, references to the Defend Trade Secrets Act, and residuals clauses — which permit the recipient to use anything their people simply remember. A residuals clause in an NDA protecting software or data assets can quietly surrender the whole point of the document.
If It Goes Wrong: What Enforcement Really Looks Like
The practical remedy is an urgent interlocutory injunction — damages after the fact are notoriously hard to quantify for leaked information, which is why speed and evidence matter more than the strength of your indignation. Courts can also grant springboard relief, restraining a recipient from exploiting the head start that misuse gave them even after the information itself has become public. Both remedies depend on the two things this post has been about: identifying the information precisely, and showing you actually treated it as secret — access controls, labelling, limited circulation. A startup that emailed its “crown jewels” to forty counterparties without follow-up will struggle to persuade a judge there was ever a secret to protect.
The Bottom Line
NDAs fail in Australian courts for predictable reasons: catch-all definitions that cannot support an injunction, perpetual obligations over information that has become public, attempts to lock up ex-employees’ know-how, and process failures around parties, timing and marking. The fixes are equally predictable — define the confidential material specifically, carve out public domain and independently developed information, sign as a deed before disclosing, bind related entities and personnel, match the term to the information’s real shelf life, and run internal practices that treat your secrets like secrets. An NDA drafted and operated that way is a genuinely enforceable instrument. One pulled from a template folder and signed on the way into the meeting is, too often, just a comfort blanket.
This article is general information only, not legal advice — whether a particular confidentiality obligation is enforceable always turns on its terms and the facts. Viridian Lawyers advises Australian startups on protecting confidential information and trade secrets — drafting and negotiating NDAs, confidentiality regimes in employment and contractor agreements, and urgent action when information walks out the door. If your standard NDA has not been reviewed since you downloaded it, get in touch.
