Non-Disclosure & Confidentiality Agreements

Many businesses have patents, purchases, scandals, and more that they would not want to get out to the public or a competitor. For example, if a company has a process that they are developing to create their products more easily, they would not want a competitor to find out about it. If they did, they could try to replicate it before a final patent can be filed. One way they could find out is through a fired/resigning/retiring employee, business partner, or current employee. How can a company protect against this? With non-disclosure (NDAs) and confidentiality agreements.

Non-disclosure agreements are the most common type of confidentiality agreement. Confidentiality agreements are any contracts that require one or more parties to keep confidential or classified information. NDAs are specifically an agreement between two or more parties where the agreement is one-way. One entity has information they would like to keep or release to the public at a time of their choosing. The others in the NDA are not supposed to disclose it. There are confidentiality agreements where the secrecy is mutual, and no one may reveal anything unless agreed upon together. These agreements would not be considered NDAs.

Whether you need an NDA or another confidentiality agreement, you need experienced entrepreneurial and corporate law attorneys. An entrepreneurial and corporate law attorney can write airtight agreements and contracts that assure if someone releases information you didn’t want to be released, you have the legal ability to see reparations in some manner. Tressler & Associates have those attorneys.

When Should a Business Utilize an NDA or a Confidentiality Agreement?

Your business should always have some kind of confidentiality agreement on hand to protect precious information. Whether it be something as important as a patent, or something as temporary as a marketing-driven announcement, an NDA should be ready and available. But would it ever be better to have a more general confidentiality agreement instead? Consider these common situations when a company would need a confidentiality agreement:

1. The business has a patent that your employees must learn about and/or use during their employment.
2. The business’s products use a material that business partners provide.
3. Another company is about to purchase your business or you’re about to purchase them before a competitor can make a bid for it.
4. The business is part of a group of businesses that have researched and developed new technology.
5. The business’s marketing team has a product reveal which their marketing strategy revolves around that another business partner’s employees know about.

These are all common situations where a company would need to have a confidentiality agreement, but not necessarily an NDA.

When You Should Use NDAs

In the situation where employees will learn your business’s patent and a business partner’s employees know about your marketing plan, you would want to use an NDA.

In these situations, the business is the one that would suffer from having the information released. If an employee isn’t careful and reveals your company’s patent to someone else or loses/leaves their position for any reason, the business risks suffering far greater consequences. The NDA makes them assume some risk so they don’t release such sensitive information.

When You Should Use a General Confidentiality Agreement

For the situations where the business’s partners know about an important material the business uses, two businesses are in a merger of some kind, or businesses are a part of a research project together, you would want another more general confidentiality agreement.

Not only are there multiple, but equally important players involved in these situations, all parties also have an equal amount of risk. Because of this, they would all also likely want to keep the information confidential. While you would not want an important material or ingredient to be public knowledge, your business partner should not want others to know either. Their own competitors can then try to sell you a material you need for a better price. In a research project, all business partners will want to control who has access to the research’s results. Everyone wants to protect their own investments against their competitors.

What Can These Agreements Not Keep Someone From Disclosing?

There are types of information that a confidentiality agreement cannot keep someone from disclosing. If anything similar to these types is in an agreement without proper wording, that section will likely be seen as voided in the court of law. It may also void the rest of the agreement, which may not have been illegal otherwise. Including any of the following demands can also see the business face criminal charges.

• Information readily and easily to the public.
• Information publicly filed with the SEC.
• The address of the business’s headquarters, whether it’s easily available or not.
• Knowledge held prior to the terms of the NDA. For example, if an employee knew about an ingredient or material in the product before being hired, an NDA cannot force them to keep it confidential.
• Information the government–local, state, or federal–requires to be publicly disclosed by law. This includes criminal activity.
• Information that can be or has been gained by reverse engineering a publically available product or service.

Also, if you wish to keep large amounts of information confidential under one agreement, it’s not illegal or void, but it is hard to enforce. NDAs, especially, are difficult to explain and enforce how and why each article of information should be kept confidential.

Contact Tressler & Associates For Your Non-Disclosure and Confidentiality Agreements

Every business has something they need to keep confidential at some point. Whether it’s an important patent, a temporary marketing tactic, a dangerous scandal, or other vital information, your business needs to be prepared. This can be having non-disclosure agreements on hand for employees and business partners and having confidentiality agreements for businesses assuming risk along with you.

Whatever situation you need a confidentiality agreement for, the Tennessee entrepreneurial and corporate attorneys at Tressler & Associates can help you. Contact our office for help.