• Key Takeaway: Companies that provide contractors access to sensitive proprietary information should ensure a non-disclosure agreement is in place to protect its enforcement rights in the event a contractor downloads that information for competitive use.  

A recent decision from the Eastern District of New York in Negative, Inc. v. McNamara, 23-cv-08503 (NRM) (JAM), 2025 WL 815755 (E.D.N.Y. 2025), underscores the critical importance of businesses taking concrete steps to protect their confidential information—especially when working with contractors.  In this case, Negative, Inc., a fashion company, alleged that a former freelance contract worker, Melissa McNamara, misappropriated confidential business information, including customer lists, pricing strategies, and product designs, to start a competing business. Despite alleging that McNamara intentionally downloaded information from the company’s Google Drive account to her personal devices, the court swiftly dismissed the company’s claims under the Defend Trade Secrets Act (DTSA), finding that Negative, Inc. failed to take reasonable measures to protect its information as trade secrets.

Central to the court’s decision was the absence of any non-disclosure agreement (NDA) or other communication to McNamara that the information she accessed was confidential or should be kept secret.  While Negative, Inc. had implemented some basic security measures, such as password protection, two-factor authentication, and limiting access to certain files, the court found these steps insufficient.  The court emphasized that, without a clear confidentiality agreement, NDA or policy communicated to the contractor, the company could not claim that it had taken the “reasonable measures” required by law to maintain the trade secret status of its information.

This case serves as a cautionary tale for businesses of all sizes. Simply relying on internal security protocols or assuming that workers will understand the implied confidential nature of certain information is not enough. To preserve the legal protections afforded to trade secrets, and the right to pursue legal action against contractors who depart with such information for competitive use, companies must ensure that all employees and contractors sign explicit confidentiality agreements. Failing to do so can leave valuable business information unprotected and undermine the company’s ability to enforce trade secret rights in court.

If you have any questions regarding the information covered in this blog, please contact Daniel Hoffman, John Baranello, or your primary attorney at Moses Singer.