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Kentucky Non-Disclosure Agreement Requirements

Kentucky also has no statute limiting what an employer can require an employee to assign in an invention-assignment clause, unlike a handful of other states, so the carve-out protection an NDA drafter might expect from California or Kansas law does not exist here.

Introduction

Kentucky also has no statute limiting what an employer can require an employee to assign in an invention-assignment clause, unlike a handful of other states, so the carve-out protection an NDA drafter might expect from California or Kansas law does not exist here. Trade secrets shared under a Kentucky NDA are protected separately under the Kentucky Uniform Trade Secrets Act (KRS 365.880 to 365.900), and a misappropriation claim generally must be filed within three years of when the misappropriation was discovered or reasonably should have been. Kentucky has no statute setting the rules for a non-compete or restrictive covenant embedded in an NDA either; the Kentucky Supreme Court's 2014 decision in Charles T. Creech, Inc. v. Brown settled the modern rule instead, holding that an existing employee's continued at-will employment, by itself, is not enough consideration to make such a covenant enforceable. A Non-Disclosure Agreement in Kentucky is otherwise an ordinary, enforceable confidentiality contract, mutual or one-way, that lets the parties agree to keep specified information secret. If a Kentucky NDA also asks an existing employee to agree not to compete or not to solicit, the employer needs to give something in return, such as a raise, a promotion, specialized training, or a changed working relationship, or that provision risks being unenforceable for lack of consideration, on top of the ordinary reasonableness test Kentucky courts apply to any restrictive covenant. The practical effect for drafting is that a Kentucky NDA should stick to confidentiality terms unless the employer is prepared to provide new consideration for anything that looks like a non-compete or non-solicit provision.

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Key Things to Know

  1. 1

    Kentucky has no employee invention-assignment carve-out statute, unlike states such as California, Kansas, or Illinois. A Kentucky NDA or employment agreement can require broader invention assignment than those states would allow, subject only to ordinary contract law and whatever public policy limits a court chooses to apply case by case.

  2. 2

    That consideration rule applies to any restrictive covenant Kentucky courts review, including a non-compete or non-solicitation clause folded into an NDA. Without new consideration, such as a raise, a promotion, or specialized training, that kind of clause risks being unenforceable even if its scope is otherwise reasonable.

  3. 3

    Trade secret protection runs through the Kentucky Uniform Trade Secrets Act (KRS 365.880 to 365.900), separate from whatever the NDA itself says.

  4. 4

    A trade secret misappropriation claim in Kentucky generally must be filed within three years of when the misappropriation was discovered or reasonably should have been discovered (KRS 365.890), and a continuing misappropriation counts as a single claim rather than restarting the clock with each new use or disclosure.

  5. 5

    Kentucky has no statute governing non-compete or restrictive-covenant enforceability. Instead, the Kentucky Supreme Court's 2014 decision in Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014), holds that an existing employee's continued at-will employment, standing alone, is not sufficient consideration to support a non-compete-type covenant; the employer must give something else in exchange.

  6. 6

    Mutual NDAs, where both sides share confidential information, and one-way NDAs, where only one side does, are both ordinary enforceable contracts in Kentucky; which one fits depends on whether the exchange runs both directions, like a partnership or acquisition discussion, or one direction, like pitching an investor.

  7. 7

    A Kentucky court can order injunctive relief to stop an ongoing or threatened breach of a valid NDA, in addition to any damages the disclosure caused.

Key decisions before you file

Before you file a Non-Disclosure Agreement in Kentucky, a few decisions shape the document: which option to choose and what each one means. The Non-Disclosure Agreement guide walks through them.

Open the Non-Disclosure Agreement guide

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KENTUCKY NON-DISCLOSURE AGREEMENT

This Non-Disclosure Agreement is entered into by [Party A Name] of [City], Kentucky and [Party B Name] of [City], Kentucky (together, the Parties).

  1. Purpose. [Party A Name] and [Party B Name] are exploring [describe the business purpose, e.g. a possible vendor relationship] and may need to share sensitive information to do so.

  2. Definition of Confidential Information. "Confidential Information" means technical, financial, or business information a disclosing Party marks confidential, or that the circumstances make clear should be treated that way, and it reaches any trade secret as KRS 365.880, part of the Kentucky Uniform Trade Secrets Act, defines that term. It excludes what the receiving Party already knew beforehand, what later becomes public through no fault of the receiving Party, what the receiving Party works out independently without relying on the disclosure, and what a third party passes along without owing anyone a duty to keep it secret.

  3. Obligations. The receiving Party may use Confidential Information only to pursue the purpose in Section 1, must protect it with reasonable care, and may share it only with its own employees, contractors, or advisors who need it for that purpose and are themselves bound to protect it on comparably strict terms. Sharing with anyone else needs the disclosing Party's prior written consent.

  4. Scope Limitation (Kentucky-Specific). Kentucky has no statute governing whether a non-compete or non-solicitation covenant is enforceable; instead, the Kentucky Supreme Court held in Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014), that an existing employee's continued at-will employment alone is not enough consideration to support a covenant restricting that employee's future work, and the employer must give something more, such as a raise, a promotion, or new training. Consistent with that rule and Kentucky's common-law reasonableness test for restrictive covenants generally, this Agreement leaves either Party's future employment, business activity, and general skills and knowledge untouched; it reaches only the Confidential Information defined above, and any non-compete or non-solicitation term the Parties want belongs in its own agreement, backed by its own new consideration.

  5. Federal Whistleblower Notice. Federal law requires this notice so the disclosing Party keeps the full set of remedies the Defend Trade Secrets Act allows. Under 18 U.S.C. Section 1833(b), nobody who shares a trade secret in confidence with an attorney or a government official, solely to report a suspected legal violation, faces criminal or civil liability for it, and the same immunity covers a trade secret disclosed in a sealed court filing.

  6. Term. Confidentiality duties under this Agreement run for [X years] after signing. Information meeting Kentucky's trade secret definition is different: it stays protected for as long as it keeps qualifying, however many years that takes.

  7. Return or Destruction. The receiving Party must return or destroy every copy of the Confidential Information once the disclosing Party asks or the purpose in Section 1 has run its course, and confirm that in writing.

  8. Remedies. Because money alone may not undo the harm an improper disclosure causes, a Kentucky court may enjoin actual or threatened trade secret misappropriation under KRS 365.882. A harmed Party may also recover damages under KRS 365.884 and attorney's fees under KRS 365.886 if the misappropriation was willful and malicious, or a claim was pursued or resisted in bad faith.

  9. Governing Law. Kentucky law governs this Agreement. Kentucky courts ask which state holds the most significant relationship to the transaction and the Parties, per Breeding v. Massachusetts Indemnity & Life Insurance Co., 633 S.W.2d 717 (Ky. 1982), and favor Kentucky law over a contrary choice-of-law clause once Kentucky has the greater interest, as in Schnuerle v. Insight Communications Co., 376 S.W.3d 561 (Ky. 2012); with both Parties located here, that standard points to Kentucky.

  10. Miscellaneous. The Kentucky Uniform Electronic Transactions Act, KRS 369.101 to 369.120, and the federal ESIGN Act, 15 U.S.C. Section 7001, make an electronic signature on this Agreement as effective as a handwritten one. If a court declares any part unenforceable, the rest remains binding. Each Party's promise to keep information confidential is the consideration for the other's matching promise.

[Party A Signature] ____________________ Date: __________ [Party B Signature] ____________________ Date: __________

Kentucky Requirements for Non-Disclosure Agreement

Definition of Confidential Information (Kentucky Uniform Trade Secrets Act, KRS 365.880 to 365.900)

Clearly defines what constitutes confidential information under Kentucky law, including trade secrets as defined in the Kentucky Uniform Trade Secrets Act.

Federal Trade Secret Protection (Defend Trade Secrets Act of 2016, 18 U.S.C. Section 1836 et seq.)

Acknowledges protection under the federal Defend Trade Secrets Act, which provides federal jurisdiction for trade secret misappropriation and allows for civil seizure of property in extraordinary circumstances.

Exclusions from Confidential Information (Kentucky Uniform Trade Secrets Act, KRS 365.880 to 365.900)

Identifies information not considered confidential under Kentucky law, such as publicly available information, information independently developed, or information rightfully received from third parties, consistent with the trade secret definition in KRS 365.880.

Obligations of Receiving Party (Kentucky Uniform Trade Secrets Act, KRS 365.880 to 365.900)

Details the specific duties of the party receiving confidential information, including maintaining secrecy, limiting access to information, and using appropriate safeguards, consistent with the reasonable-efforts-to-maintain-secrecy standard in KRS 365.880(4)(b).

Remedies for Breach (Kentucky Uniform Trade Secrets Act, KRS 365.882, 365.884, and 365.886)

Outlines available remedies in case of breach: injunctive relief for actual or threatened misappropriation under KRS 365.882, damages under KRS 365.884, and attorney's fees under KRS 365.886 where misappropriation was willful and malicious or a claim was pursued or resisted in bad faith.

Non-Solicitation Provisions (Kentucky Common Law on Restrictive Covenants)

Kentucky has no statute governing non-solicitation or non-compete enforceability; courts apply a common-law reasonableness test considering the subject matter, the nature of the business, and the circumstances of the case. Critically, under the Kentucky Supreme Court's decision in Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014), an existing employee's continued at-will employment alone is not sufficient consideration to support a non-solicitation or non-compete covenant; the employer must give something additional, such as a raise, a promotion, or specialized training, or the covenant risks being unenforceable regardless of how reasonable its scope is.

Electronic Signatures Compliance (Kentucky Uniform Electronic Transactions Act, KRS 369.101 to 369.120, and Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001)

Acknowledges the validity of electronic signatures in accordance with both Kentucky's Uniform Electronic Transactions Act and the federal ESIGN Act, allowing for electronic execution of the NDA.

Disclosure Required by Law (Kentucky Rules of Civil Procedure CR 26.03 and Federal Rules of Civil Procedure Rule 26)

Addresses situations where disclosure may be required by law, court order, or governmental authority, requiring the receiving party to provide prompt notice to allow the disclosing party to seek a protective order. CR 26.03 is Kentucky's actual protective-order rule governing a party's or discovery target's ability to limit compelled disclosure in litigation.

Compliance with Securities Laws (Securities Exchange Act of 1934, 15 U.S.C. Section 78j(b), and SEC Rule 10b-5)

Acknowledges that certain confidential information may constitute material non-public information under federal securities laws, prohibiting insider trading based on such information. This is particularly important for NDAs related to investment discussions.

Relationship of Parties (Kentucky Business Entity Laws, KRS Chapters 271B, 275, and 362)

Clarifies that the NDA does not create any agency, partnership, or joint venture relationship between the parties. KRS 362.175, part of Kentucky's partnership law, defines a partnership as an association of two or more persons to carry on as co-owners a business for profit, the statutory test a court would apply to decide whether this Agreement inadvertently created one.

Frequently Asked Questions

A Non-Disclosure Agreement in Kentucky is an ordinary contract in which one or both parties agree to keep specified information confidential. It can be mutual, where both sides share confidential information, or one-way, where only one side does. Trade secrets shared under the agreement are also separately protected by the Kentucky Uniform Trade Secrets Act (KRS 365.880 to 365.900) regardless of what the NDA itself says.

It can, but Kentucky has no statute setting the enforceability standard for one; a covenant not to compete embedded in an NDA is tested only under Kentucky's common-law reasonableness rules, and under the Kentucky Supreme Court's 2014 decision in Charles T. Creech, Inc. v. Brown, an existing employee's continued at-will employment, by itself, is not enough consideration to make the covenant enforceable. The employer needs to offer something else in exchange, such as a raise, a promotion, or specialized training, when asking a current employee to sign one.

No. Kentucky has no general statute governing non-compete or restrictive-covenant enforceability; that question is decided entirely by common law. The one Kentucky statute that touches restrictive covenants, KRS 216.724, only voids non-compete clauses in contracts between health care services agencies and their temporary direct care staff, and does not apply to Kentucky NDAs generally.

A trade secret misappropriation claim under the Kentucky Uniform Trade Secrets Act generally must be brought within three years after the misappropriation is discovered, or after it reasonably should have been discovered with reasonable diligence (KRS 365.890). A continuing misappropriation is treated as a single claim rather than a series of claims that each restart the clock. A separate breach-of-contract claim over the NDA itself follows Kentucky's ordinary written-contract limitations period.

Kentucky has no statute limiting this, unlike states such as California or Kansas. A Kentucky NDA or employment agreement can require an employee to assign inventions developed on their own time if its language says so, subject only to ordinary contract interpretation and whatever public policy limits a Kentucky court might apply case by case; there is no dedicated statutory carve-out protecting the employee here.

It depends on whether confidential information will flow in both directions or only one. A mutual NDA fits a two-way exchange, such as a merger, partnership, or joint-venture discussion where both sides disclose sensitive information. A one-way NDA fits a one-directional exchange, such as pitching a business plan to a Kentucky investor who is not sharing anything confidential back. Both forms are equally enforceable in Kentucky; the choice is about which structure matches the actual relationship.

No. A Kentucky NDA is an ordinary contract, not a formal instrument like a will or power of attorney, so it does not require notarization or witnesses to be valid. It only needs the standard elements of a valid contract: an offer, acceptance, and consideration, along with signatures from the parties being bound.

The non-breaching party can seek injunctive relief to stop an ongoing or threatened disclosure, along with damages caused by the breach. If the disclosed information also qualifies as a trade secret, the Kentucky Uniform Trade Secrets Act provides an additional, independent basis for relief, including damages and attorney's fees, separate from whatever remedies the NDA itself specifies.