Non-Disclosure Agreements and Their Importance in Development of New Ideas

May 13, 2008

Non-Disclosure Agreements and Their Importance in Development of New Ideas

A non-disclosure agreement is made between two parties when they agree that one or both parties will not reveal specific information that is considered to be confidential by the disclosing party. Non-disclosure and confidentiality agreements are commonly used to enforce obligations of confidentiality on a party that is receiving information or material from a disclosing party that the second party considers to be secret or classified.

There are some very important issues to consider when drafting a non-disclosure agreement. To begin with, it is necessary to clearly and specifically identify and describe the information that is to be considered confidential. If there are any limitations on which information is to fall into this category then they need to be specified.

For example, there may be information that is already known to the party that will be signing the agreement. Information that is made public must also be addressed. It must be clarified which party is disclosing the information and which party is subject to the non-disclosure agreement.

The time period during which this information is to remain confidential is also an important concern to be addressed in the non-disclosure agreement. Does the confidential information actually qualify as a “trade secret” to be kept private indefinitely, or will there be a time-based limitation? There may also be specific purposes for which the information will need to be disclosed, and then these situations need to be specified as well.

There are some specific provisions that may be frequently found in a non-disclosure agreement. There may be a provision that allows the remaining portion of the agreement to remain in effect if another portion of the agreement is found for some reason to be unenforceable. There may be a provision dealing with whether or not the non-disclosure agreement will be binding to heirs or other assigns.

There is often a provision that calls for the return of any confidential materials that have been used by the recipient (signing party). A provision is often included that states that the disclosing party retains the right to have an injunction issued by a court if the non-disclosure agreement is ever breached.

Provisions that specify the ownership of all the confidential information may be required. It is also often detailed in a provision how and when disputes will be arbitrated as well as the controlling law.

In order to execute a non-disclosure agreement, it is necessary that the information that is to be protected will protect a justifiable business concern. For example, information that is commonly known through a specific industry will generally not be covered by a non-disclosure agreement, or else that portion of the agreement may be found to be unenforceable.

For information to be protected from disclosure, it needs to truly be secret, it must have actual commercial value, and it must pose a threat to a company’s operations if the information is disclosed.

For these reasons, you may want to consult with an attorney before drafting or signing a non-disclosure agreement. On the other hand, this is one of many types of common contracts that can easily be purchased in downloadable form on the internet.

Mark Warner is a Legal Research Analyst for RealDealDocs.com. RealDealDocs gives you insider access to millions of legal documents drafted by the top law firms in the US. To find Release Agreements, click here. Free Search!

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