You’re running a business, and that means you probably have information that you don’t want ending up into the wrong person’s hands. This info doesn’t have to be high-tech stuff like the design for the next Snapchat. It can be things like your customer list, prospect list, business plans, passwords, financial records, competitive analysis, technical information, or ideas for a new marketing campaign – which are all arguably considered “trade secrets.”
So you’ll want to protect your company’s proprietary information. That’s where the non-disclosure agreement (NDA), also known as a confidentiality agreement, comes into play.
What’s an NDA & Who Needs One?
An NDA binds someone to keep a secret. It can be a contractor, employee, advisor, partner, coach, investor and any other business partners who may get a behind-the-scenes view of your business and its trade secrets.
Examples of ways to use an NDA are:
● To ensure a subcontractor doesn’t speak directly with your clients
● To ensure consultants on a new website project don’t talk about the new site until it’s released
● To keep a business coach from stealing your idea for a new business or product/program
Elements of an NDA
A typical NDA should include the following components:
1. What’s Confidential
Be very specific about what can’t be disclosed, leaving no room for uncertainty on what information is protected.
2. Define the Use of the Confidential Information
Among other things here, make sure the language is clear that the NDA isn’t granting an implied license or other rights to the information.
3. Length of Protection
Specify exactly how long the information must stay confidential (an unreasonable amount of time could make the contract unenforceable).
4. Rights and Responsibilities
- Define what the contractor can and can’t do with the confidential information. (For example: that they can’t discuss with anyone not working on or related to the project.
- Clarify that there’s no obligation to enter into future agreements.
5. What if They Violate the NDA
There should always be a provision about remedies in the event there’s a breach of the NDA, including damages you’re entitled to. Typically you sue for damages, but it can be difficult to calculate the amount. Always include language on “injunctive relief” – which allows you to request a court order to stop the violator from continuing to breach the NDA.
6. How to Resolve Disputes
Some important points to define how a dispute should be resolved when there’s a disagreement regarding the NDA:
- The forum for resolving the disagreement
- Who is responsible for attorneys fees?
- What governing law will control the contract
The above are just a few of the provisions that should be in an NDA. Remember that an NDA doesn’t guarantee someone won’t steal or exploit your confidential information, but it does let you have legal recourse if they do. It’s smart to get an NDA signed as part of your standard practice when working with anyone new.