The Role of Confidentiality Agreements in a Corporate Compliance Program

June 26, 2014

A recent federal court decision from Pennsylvania illustrates the importance of a confidentiality agreement as part of a compliance program. The Pennsylvania court found that a confidentiality agreement that had been signed by an employee restricted the ability of the whistleblower claimant to use confidential information to support its qui tam claim under the federal False Claims Act.

The whistleblower had attempted to base the False Claims Act action on information that was obtained through employment such as contracts, business data, audit reports, and other documents. The target company filed a counterclaim against the whistleblower that alleged breach of the confidentiality contract. The court refused to dismiss the counterclaim.

Although there is a split on how federal courts come down on this issue, the existence of a valid confidentiality agreement can be an arrow in your quiver if you are faced with an employee’s whistleblower claim. Your compliance program should include a systematic program to protect your trade secrets and confidential information.

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