Michigan Non-Disclosure Agreement Requirements

Introduction

Key Things to Know

1. 1

   A bill pending in the Michigan legislature, House Bill 4040, would prohibit nearly all employer-worker noncompetes outright, similar to laws already in place in California, Minnesota, North Dakota, and Oklahoma. It has not passed either chamber and has not been signed into law as of this writing, so it does not currently change how a Michigan NDA's confidentiality clause should be drafted.

2. 2

   Michigan's noncompete statute, MCL 445.774a, lets an employer obtain a restrictive covenant from an employee only if it is reasonable as to duration, geographic area, and the type of employment or line of business, and protects only the employer's reasonable competitive business interests; a court can narrow an unreasonable covenant rather than voiding it outright. It applies only to covenants entered into after March 29, 1985.

3. 3

   That reasonableness risk runs through the scope of the confidentiality definition, not the existence of the NDA itself. An NDA that protects genuine trade secrets and sensitive information, without functioning as a disguised restriction on future employment, is not the kind of covenant MCL 445.774a scrutinizes.

4. 4

   Trade secret protection in Michigan runs through the Michigan Uniform Trade Secrets Act (MCL 445.1901 through 445.1910), separate from whatever the NDA itself says.

5. 5

   A trade secret misappropriation claim in Michigan generally must be filed within three years of when the misappropriation was discovered or reasonably should have been discovered (MCL 445.1907), with a continuing misappropriation treated as a single claim rather than a series of separate ones.

6. 6

   Michigan has no statute carving employee inventions made on personal time out of an invention-assignment clause, unlike states such as California, Delaware, Illinois, Minnesota, North Carolina, and Washington. If a Michigan NDA or related employment agreement includes an invention-assignment provision, its scope depends on the contract's own language rather than a statutory floor.

7. 7

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

Michigan Requirements for Non-Disclosure Agreement

• Definition of Confidential Information (Michigan Uniform Trade Secrets Act, MCL 445.1901 through 445.1910)

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

• Trade Secret Protection (Michigan Uniform Trade Secrets Act, MCL 445.1902)

  Addresses the specific requirements for trade secret protection under Michigan law. Section 1902 defines a trade secret as information that is the subject of efforts reasonable under the circumstances to maintain its secrecy, the basis for this row's reasonable-efforts standard.

• Federal Defend Trade Secrets Act Compliance (18 U.S.C. Section 1836)

  Incorporates protections under the federal Defend Trade Secrets Act, which provides additional civil remedies for misappropriation of trade secrets used in interstate commerce.

• Whistleblower Immunity Notice (18 U.S.C. Section 1833(b), Defend Trade Secrets Act)

  Includes the required notice that an individual may not be held liable for disclosing a trade secret in confidence to a government official or attorney to report a suspected violation of law, or in a sealed court filing, as required to preserve the disclosing party's remedies under the Defend Trade Secrets Act.

• Reasonableness Standard for Commercial Restrictive Covenants (Innovation Ventures, LLC v. Liquid Manufacturing, LLC, 499 Mich. 491 (2016))

  Innovation Ventures held that a Nondisclosure Agreement and related equipment agreement between two Michigan businesses were not void for lack of consideration, and that a restrictive covenant between businesses (as opposed to an employer and an employee) is evaluated under a common-law rule-of-reason standard rather than MCL 445.774a's employment-specific reasonableness framework.

• Protective Orders for Compelled Disclosure (Michigan Court Rule 2.302(C))

  MCR 2.302(C) is Michigan's discovery protective-order rule: on a showing of good cause, a party may obtain a court order shielding confidential material from broader disclosure, including sealing filed materials. It is the mechanism a receiving Party can invoke if compelled to produce Confidential Information in litigation, supporting a standard NDA carve-out for disclosure required by law or court order.

• Remedies for Breach (Michigan Court Rule 3.310, injunctions; MCL 600.2919a, statutory conversion)

  Specifies available remedies for breach, including injunctive relief under Michigan's court rule on injunctions, and treble damages under Michigan's statutory conversion provision where a breach amounts to converting the confidential information to the breaching party's own use.

• Electronic Signatures Compliance (Michigan Uniform Electronic Transactions Act, MCL 450.831 et seq.; 15 U.S.C. Section 7001, E-SIGN Act)

  Acknowledges the validity of electronic signatures under both Michigan and federal law.

• Non-Solicitation Provisions (Michigan Antitrust Reform Act, MCL 445.771 et seq. and MCL 445.774a)

  Reasonable restrictions on soliciting employees or customers, drafted in compliance with Michigan's reasonableness standard for restrictive covenants, which extends to non-solicitation covenants as well as pure noncompetes.

• Data Privacy Compliance (Michigan Identity Theft Protection Act, MCL 445.71 et seq.; federal laws as applicable, HIPAA, GLBA)

  Addresses handling of personal information in compliance with Michigan's identity theft protection and data security standards and applicable federal regulations, when confidential information includes personal data.

• Consideration (Yerkovich v. AAA, 461 Mich. 732 (2000))

  Explicitly states the consideration provided in exchange for confidentiality obligations. Michigan's preexisting-duty rule, established in Yerkovich, holds that a promise to do what a party is already legally bound to do is not valid consideration for a new promise.

• Equitable Relief (Michigan Court Rule 3.310; Michigan common law on equitable remedies)

  Acknowledges that monetary damages may be insufficient for a confidentiality breach and that equitable remedies, including injunctive relief, may be sought, consistent with Michigan equity principles.

• Disclosure to Representatives (Michigan common law of agency; Michigan Uniform Trade Secrets Act, MCL 445.1902)

  Provisions governing disclosure to employees, agents, and representatives, including the requirement to bind such persons to confidentiality obligations no weaker than the Agreement's own, consistent with the reasonable-secrecy-efforts standard in Michigan's trade secret definition.

• Statute of Limitations (MCL 600.5807)

  Addresses the time period within which a breach-of-contract claim over this Agreement must be brought. Michigan sets a six-year limitations period for actions on a written contract.

• Integration Clause (UAW-GM Human Resource Center v. KSL Recreation Corp., 228 Mich. App. 486 (1998))

  States that the Agreement constitutes the entire understanding between the parties regarding confidentiality. This case holds that a merger or integration clause bars parol evidence of terms not included in the written agreement, except in narrow fraud or incompleteness circumstances.

• Waiver Provisions (Quality Products and Concepts Co. v. Nagel Precision, Inc., 469 Mich. 362 (2003))

  Clarifies that failure to enforce a provision does not itself waive it. This Michigan Supreme Court case holds that parties may still mutually waive or modify a contract despite a written anti-waiver clause, given the parties' freedom to contract.