A non-disclosure agreement (NDA) is a legal contract between two parties that agree not to disclose information covered by this agreement. This contract establishes a confidential relationship between the parties. An NDA can also be referred to as a confidentiality agreement. In general an NDA’s purpose is to protect sensitive information, assist the inventor keep the patent rights and expressly outline what is considered private information.
For example, this could include things like test results, customer lists, software, passwords, system specifications and other data. NDAs have served as a legal framework to maintain trust and prevent crucial information from leaking out into the public. There are three different types of NDAs: the standard mutual non-disclosure agreement, one-way confidentiality agreement and confidentiality letter. They all have unique purposes depending on the client’s needs.
Typically, NDA’s arise in employment and business situations. Employees may be required to sign an NDA to protect the employer’s trade secrets and other confidential business information. They are most common for businesses entering into negotiations with other companies. They create a space for companies to share sensitive information without fearing that it will end up in the hands of their competitors. For example, the protected information may include a marketing strategy, a sales plan, potential customers, a manufacturing process, and proprietary software.
Generally, the time period for these agreements is limited to as long as the confidential information is considered useful. Depending on the nature of the information that was exchanged, a shorter or reasonable amount of time, like one year, may be more enforceable by the courts. But, information like trade secrets may benefit from being kept confidential for a longer period of time. Therefore, setting a reasonable time period can vary from contract to contract and the parties adhering to it. However, like most contracts, an NDA would be unenforceable if the contracted terms are illegal.
What is Included in a Non-Disclosure Agreement?
NDA can vary by state in terms of format. But there are typically some terms that must be included in the agreement. These include:
- Identifying the parties to the agreement;
- Defining what constitutes confidential information in this case;
- Defining the various exclusions from confidentiality;
- Determining the appropriate uses of the information to be revealed;
- Determining the reasonable time periods and;
- Other miscellaneous provisions (state laws and attorney fees).
A boilerplate NDA is a standardized legal document that can be reused in a new context without any substantial changes to the text. Therefore, courts are becoming more hesitant to enforce them because they do not take heavily rely on changed circumstances for NDAs. Specifically, the courts take into issue the provisions in the agreements covering “all information regarding a company’s business.” This language is considered to be overbroad and vague because it unnecessarily extends to all information.
Furthermore, courts have an issue with provisions that lack geographic and time limits because one limit in one state may not extend to another state creating additional NDA’s disputes. These documents generally remain unchanged, this can mislead the parties into accepting unfavorable conditions that even small changes in the boilerplate text could have prevented.
NDAs can be different depending on the needs of the parties, as well as state laws. If you have any questions or need guidance regarding an NDA for your particular issue, a lawyer can help with the drafting and reviewing of the agreement. This will also help ensure that the agreement is legally binding and enforceable under law.
What Can You Expect If You Violate the Non-Disclosure Agreement?
If a NDA is signed and specific information is to remain confidential, violating this trust in the contract is considered a breach of non-disclosure agreement. There are certain legal obligations that must be abided by to be in adherence to the NDA.
These could include the following situations:
- Using the confidential information to develop a similar business;
- Obtaining photocopies of confidential information and providing insider information to a competitor for financial or personal gain;
- Sharing confidential information with external parties;
- Exposing confidential information to a reporter, blogger, or journalist;
- Publishing the sensitive information on a blog, online media source, or social media and;
- Discussing confidential information to another individual in social situations.
Additionally, courts have discretion in interpreting the scope of an NDA, it usually depends on the language of the agreement. For example, a party may be able to avoid a negative judgment if one party to the agreement can prove that they had knowledge covered in the NDA prior to its signing and they had obtained this information outside of the contract.
A potential breach or violation of the NDA, is a serious contract claim issue. If there has been a breach of NDA there are several steps to consider. First, you need to review the original document because it may already include the remedies for a breach of contract.
Furthermore, you need to gather data and investigate how the information actually leaked. Getting the right information is crucial. This is important in developing a strong case and ensuring you have evidence to back up your claims. Additionally, when collecting the information, consider how the sensitive information has been used and the economic value of the information. This will be useful for determining the monetary damages for the claim.
Moreover, you need to understand and strategize about what legal claim needs to be made, this step often requires the guidance of an experienced attorney in the field. In almost all cases involving a breach of NDA, you will be able to obtain damages stemming from a breach of contract. Other legal resources might include mishandling of trade secrets, copyright infringement, breach of fiduciary duty, conversion, trespass and patent infringement.
Lastly, NDAs legally guarantee that confidential information stays protected in a variety of situations. However, it is important to know how these legal agreements work to fully benefit from them and before signing or creating the document. If you are well-informed it can assist you in making the best legal decision for your present and future contracts.
What Should I Do If I Have Been Accused of Violating a Non Disclosure Agreement?
If you have been accused of violating a NDA, it is important to explore your legal options and seek consultation from a local employment lawyer. If you have signed an NDA, make sure you are aware of all the legal obligations that attach with this legal contract. Being accused of a violation of the agreement will be a challenging process. Knowing your rights, options and legal remedies can make dealing with breaches of contracts more manageable.
NDA’s are highly used in the business and employment arena. Therefore, if you are contemplating creating an NDA or signing one it is important to do due diligence and be shielded from liability exposure in the future. Furthermore, the confidential information in the agreement, if leaked can damage your reputation as a business or restrict you as an employee.
Therefore, addressing these issues early on in the process and contemplating can minimize your losses in the future. It is highly recommended to equip yourself with the proper tools and techniques to file this type of legal claim. Seeking legal counsel from an expert working on an NDA claim can maximize your benefits when faced with such a claim.