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What is a Non-Disclosure Agreement?

August 14, 2018

We’ve all been asked to keep a secret at one point or another, but if that secret is from a friend or family member, the only real consequence of breaking that pledge is hurt feelings and a violation of trust. But a non-disclosure agreement or NDA basically takes the notion of keeping a secret even further by creating a legal obligation to keep a secret.

NDAs are common in many different types of business relationships across a range of settings as they offer one of the best ways to protect important or confidential information that may not be protectable like other intellectual property such as through trademark, copyright, or patent.

Non-disclosure agreements can protect things like schematics for a new product, sales or marketing plans, client information, a unique manufacturing process, or even secret recipes like that of Coca-Cola. When you employ an NDA, you also have the security of knowing that when or if someone violates a confidentiality agreement, you may have a legal recourse and could even sue for damages, if necessary.

In the most basic form, an NDA is a contract which protects a confidential relationship between two parties, one who wants to protect some kind of trade secret and another person who will be given access to this information. The person who will have access to the secret could be a new employee, a potential investor, an outside consultant, or even a contractor like an IT firm or other third party. Any of these people could have access to information that is crucial to the success of your business, or which could provide an advantage to the competition if it were revealed.  These NDAs can cover virtually anything, ranging from customer lists or databases, software, passwords, test results, and much more.

Many business owners are conscious of the fact that they need to protect their intellectual property through patents, trademarks, and copyrights, but then fail to protect their most sensitive data or resources with a non-disclosure agreement.

Every non-disclosure agreement is different, but each one contains a few specific elements, including defining confidential information, exclusions, obligations from the parties involved, and time periods.

Defining the confidential information is done in a way that establishes the rules or scope of the confidential information without releasing precise or sensitive elements. Exclusions are also often used to delineate what is excluded from the agreement, including information that is already common knowledge or information collected prior to any agreement. Time periods in business settings are up for negotiation, but a common time frame is five years.

Furthermore, an NDA can include specific information on the consequences of violating the confidentiality agreement, including any monetary damages or rights forfeited by the party who failed to uphold their end of the bargain.

Non-disclosure agreements are surprisingly common in today’s world and are an important piece of the puzzle when it comes to protecting the intellectual property of your business when coupled with trademarks, copyrights, and patents as necessary.

The team of intellectual property lawyers at Fears Nachawati can explain every aspect of the NDA process and help identify which aspects of your business or idea are most in need of additional types of protection. A concrete plan of action to protect your intellectual property can be one of the best contributors to the ultimate success of your business.

Don’t wait to legally protect your intellectual property. Schedule a free case evaluation with a member of our team by calling at (866) 705-7584, or by visiting the offices of Fears Nachawati located throughout the great state of Texas, including in Houston, Dallas, Austin, Fort Worth, and San Antonio.


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