What Happens If Someone Breaks an NDA?

In the Entertainment, Media and Creative industry we are always building assets. And if we have great ideas and a great plan of execution, these assets start appreciating over time. Whether it’s your IP, Artwork or Brand—the more it appreciates the more you can lever it against partnerships, licensing deals or any obstacle on your roadmap. 

Every great idea is an asset. And often, it’s important to give it the right protection. 

That’s why Non-Disclosure Agreements (NDAs) are essential in creative industries, protecting the key dependencies in your project and plan—so that the most value can be gained from your venture.

But what happens when someone breaks an NDA? Is it just an empty threat, or are there real legal and financial consequences? 

Before we start, have you already Downloaded the NDA Template?

Alright, let’s get into it.

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Confirm the Breach

Before taking action, you should verify that a breach has actually occurred. You should ask and analyze the following questions:

• Was the information confidential? If the leaked material wasn’t explicitly defined as confidential in the NDA, it will be difficult to enforce the agreement. For that reason it’s essential to include all important information as confidential in the NDA.
• Did the disclosure violate the NDA’s terms? Actually, some if not most NDAs in the creative industry allow limited disclosures. This may include gaining legal counsel or discussing it with a partner.
• Do you have proof? Without proof you can’t enforce an NDA. It’s important to have a solid paper trail—emails, contracts, witness statements, etc. to strengthen your case.

You should keep records of all signed NDAs and document access to sensitive materials to protect your case.

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Assess the Damage

Not all NDA breaches are equal. Really, sometimes a breach of an NDA will only cause a minor inconvenience. However, there are some cases in which the leak of sensitive information could cause serious operational and strategic setbacks. And that can be very costly.

It’s always important to seriously assess the damage done by a breach. And prioritize your energy to enforcing an NDA only when necessary. Things to consider are:

• Reputation Damage – A leaked project can destroy your rollout strategy
• Financial Losses – Partners or Investors may pull out if operational secrets go public
• Competitive Risk – A competitor gaining insights that undermine your position

Remember, quantifying the damage (lost revenue, legal costs) is essential in determining what your next steps will be.

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Taking Action

Once a breach is confirmed, act quickly to limit further exposure:

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1. Send a Cease-and-Desist Letter

A formal cease-and-desist letter is often the first step.

• It Alerts the breaching party that they’re in violation
• It Demands they stop further disclosures immediately
• It Signals that legal action is coming if they don’t comply

A well-worded letter from your lawyer can resolve most breaches before they escalate.

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2. Request an Injunction

If confidential information is already out, a court injunction can legally force the recipient to stop using or spreading it. This is crucial for:

• Preventing further leaks
• Halting unauthorized product launches
• Stopping employees or competitors from exploiting stolen data

The longer sensitive information circulates, the harder it is to contain.

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Enforce Legal and Financial Penalties

If the damage is severe, legal action may be necessary. Possible consequences for the breaching party include:

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1. Monetary Damages

Some NDAs include liquidated damages clauses, specifying pre-agreed financial penalties for breaches. Courts may also award:

• Compensatory damages – Direct financial losses caused by the breach
• Punitive damages – Extra penalties if the breach was intentional or malicious

If an NDA doesn’t specify damages, courts calculate them based on the harm done.

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2. Legal Fees and Court Costs

Many NDAs include fee-shifting clauses, requiring the breaching party to pay for legal expenses if a lawsuit is necessary.

A strong NDA makes it clear that violating it won’t just be costly—it’ll be very costly.

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3. Criminal Charges (Extreme Cases)

If the NDA breach involved:

• Theft of trade secrets
• Corporate espionage
• Fraud or insider trading

Then criminal prosecution could follow, leading to fines or even jail time.

If espionage is involved, laws like the U.S. Defend Trade Secrets Act (DTSA) or the EU’s Trade Secrets Directive may apply.

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Strengthen Your Future NDAs

After handling a breach, refine your NDA process to prevent future violations:

• Use stronger enforcement clauses – Make financial and legal penalties clear
• Limit access to sensitive info – Only share on a need-to-know basis
• Monitor compliance proactively – Review who has access to confidential data

Prevention is always better than legal battles. Understand the deals you are working on, analyze their dependencies and where necessary make NDAs a standard part of the deal, contract, or collaboration.

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Conclusion

And NDA can be used to your benefit when a breach has occurred. However, this does require accurate tracking of information on your end, as well as being clear in your NDA of how breaching it will affect the relationship. 

If you understand the concepts behind using an NDA, you will be much better prepared for your creative ventures and partnerships. Good luck!

Need a solid NDA template for the Creative Industry? Be sure to Download the Free NDA Template from our Resources page!

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