Wesley Dunn, Senior Counsel at Potomac Legal Group, recently co-led a high-level Continuing Legal Education (CLE) session, titled “Enforceable Nondisclosure Agreements: Protecting Trade Secrets.”
As an experienced litigator with a deep background in both federal service and private sector employment law, Mr. Dunn addressed a legal landscape where the traditional, broad-reaching nondisclosure agreement is under increasing pressure from both judicial and regulatory bodies. The session focused on the transition from using generic, boilerplate templates to crafting surgical, defensible instruments that provide genuine protection of corporate assets.
Moving Beyond the “Catch-All” Clause
One of the most significant takeaways from Mr. Dunn’s presentation was his declaration that the era of the “everything is confidential” boilerplate is effectively over. Modern courts and regulators are increasingly viewing overly broad NDAs as unlawful restraints on trade and infringements on worker rights.
Mr. Dunn emphasized that specificity is the primary driver of enforceability. He guided practitioners through a methodology for isolating true trade secrets from general industry knowledge or an employee’s inherent professional skill set. By drafting agreements that target specific, high-value CBI rather than casting an impossibly wide net, businesses can create documents that are not only clearer to the signatory, but significantly more resilient when facing a motion to dismiss in court.
The Role of Strategic Exclusions and “Safety Valves”
A robust NDA is defined as much by what it excludes as what it includes. Mr. Dunn identified “carve-outs” as the essential safety valves of a well-drafted agreement. To remain enforceable, an NDA must explicitly acknowledge legal exceptions, such as information already in the public domain, data acquired via third parties without confidentiality obligations, and mandatory whistleblower protections under federal law.
Mr. Dunn warned that failing to include these standard exclusions doesn’t just create a loophole—it risks making the entire agreement unconscionable. In the eyes of a judge, a document that appears to “gag” an employee from exercising their legal rights can lead to the total invalidation of the contract, leaving the company’s actual trade secrets entirely exposed.
Navigating the Rise of AI
In today’s landscape, it is a safe bet that every party to an NDA is utilizing AI in some capacity, yet standard agreements still often assume disclosures only happen between individuals. Mr. Dunn emphasized that to prevent proprietary data from being absorbed into a global system through model training or telemetry logs, modern NDAs must explicitly address how AI tools interact with sensitive information.
Agreements should clearly define “Confidential Information” to include any data created by or derived from AI inputs, such as logs and specific outputs. Beyond definitions, it is critical to spell out permitted and prohibited uses, specifically governing the use of third-party model providers, the training of AI models on sensitive data, and the handling of AI residuals.
Litigation Realities: Deterrence Over Damages
Drawing on his extensive litigation background, Mr. Dunn provided a pragmatic analysis of breach-of-contract scenarios. While pursuit of injunctive relief and liquidated damages remain vital tools, he argued that the ultimate goal of an enforcement provision should be deterrence rather than retribution.
The most effective provisions are those drafted to be firm enough to discourage misappropriation from the outset, yet reasonable enough to avoid being classified by a court as an unenforceable penalty. Mr. Dunn’s approach focuses on creating a “litigation-ready” posture that positions the company to act decisively the moment a breach is detected.
The Bottom Line: Precision as a Competitive Advantage
Mr. Dunn concluded by framing the NDA negotiation as an exercise in professional judgment and risk management and offered a holistic view of the intersection between corporate security and employment law.
The core message for the business community is clear: effective legal protection requires a balance of transparency, fairness, and technical accuracy. In a world where trade secrets are a company’s most valuable currency, the strategic insights shared by Wesley Dunn provide a necessary roadmap for securing that value without overstepping legal bounds.
Should you have questions about an NDA, or any employment matter, contact Wesley Dunn and the employment attorneys at Potomac Legal Group to schedule a review of your matter.
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