Are NDAs of Any Value?

The $222 Million Lesson: Zest Labs vs. Walmart

In May 2025, a federal jury in Arkansas delivered a staggering verdict that echoed through the tech world. Zest Labs, a small technology company, was awarded $222 million after a jury found that Walmart had willfully and maliciously stolen their trade secrets.

Background:

Zest Labs had developed a proprietary system called "Zest Fresh" to help retailers track and extend the shelf life of fresh produce. They shared the intimate details of this tech with Walmart under a clear non-disclosure agreement, hoping to secure a massive partnership.

Instead of a partnership, Walmart allegedly took that confidential information to build their own competing system, "Eden." 

Outcome:

The jury concluded that Walmart used Zest’s trade secrets to file their own patents and bypass the startup entirely. 

The court awarded Zest $72.7 million in compensatory damages and a massive $150 million in punitive damages. A key aspect of the case was the fact that Zest took various steps to protect their trade secrets. One of these steps being robust NDAs!

Why High-quality NDAs are Non-Negotiable

The Walmart case proves that a well-drafted NDA is a fundamental step that all organisations should take when sharing highly confidential information with a partner, supplier or investor. 

1. It Defines What is "Yours" and how it can be used

A generic template often fails because it’s too vague. The key is to be broad enough to cover unexpected disclosures, but specific enough that a judge won't throw it out for being "vague."

A good NDA should outline:

• The “What”: outline what is being shared (e.g. Trade secrets, customer lists, source code, financial data, etc.); and 
• The “Why”: state the purpose for which data is being shared 0

2. It Creates a Paper Trail for Due Diligence

When you reach Series A, investors will look at who you’ve talked to and what you’ve shared. Having a central repository for contract management that shows every partner signed an NDA before seeing your deck is a major green flag for potential investors.

3. Deterrence and Damages

As the Zest Labs case demonstrates, an NDA doesn't just stop a leak, it provides the legal "teeth" to seek punitive damages should your sensitive information be misused.

NDA Checklist

Wondering whether your NDAs are good enough?  Here is a handy checklist:

• Scope: Ensure that the definition of "Confidential Information" covers your specific trade secrets.
• Data Use Restrictions:Does the NDA restrict access only to essential employees and hold the signing party liable for any leaks by their contractors or advisors
• Loopholes? Are there clauses allowing the other party to use ideas "retained in memory"? (If yes, consider removing these as it’s a common IP trap)
• Term: How long is your confidential data protected for?  2–3 years is usual, but you may want to carve out core trade secrets and source code

Your NDAs, Automated

In the high-stakes world of SaaS and tech, your trade secrets are a core asset. Don't hand them over without the right protection in place. Whether you are pitching to a VC or demoing for a retail giant, ensure you implement robust NDAs to protect your information. Legal tech companies like Flow Legal can help you create high-quality NDAs quickly, easily and for free.