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They say no-one ever gets sued for breaching an NDA – $200 million says otherwise

By on February 3, 2017

There is an old saying that a non-disclosure agreement is not worth the paper it’s written on: secrets are hard to protect, and despite the best efforts of lawyers to get you to sign away all your rights whenever you sign the guest register at a company, NDAs are often regarded as a formality.

Not any more.

In the recent successful claim by Zenimax against Facebook, alleging that Facebook subsidiary Oculus had improperly used code from Zenimax to build its Rift VR headset, a substantial portion of the damages was levied due to the NDA.

The jury found that  Oculus didn’t steal Zenimax’s trade secrets, but it did breach a non-disclosure agreement, and the court ordered Facebook to pay $200 million for this breach, plus $300 million for “false designation” and copyright infringement.

Turns out NDAs have teeth after all.

For the record, I take NDAs seriously. I am a man of my word, and being known as loose-lipped or untrustworthy makes it very hard to build strong professional relationships. But I mainly do it because it is the right thing to do, rather than out of a carefully balanced economic analysis of whether it is in my best interests. This judgment adds the weight of force of law to “doing the right thing”. Which is nice.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: