When you own a business it is vital to ensure that your intellectual property and trade secrets are protected. However, as a business grows and changes, there are certain circumstances in which sensitive information must be shared. A non-disclosure agreement (NDA) can help keep confidential information private and is especially important to maintain a competitive advantage in your industry. An experienced business lawyer can help you create a well-crafted NDA that protects sensitive information and your business interests.
What Is a Non-Disclosure Agreement?
Innovation and new, profitable ideas often require letting people in on valuable information. A non-disclosure agreement is a legally binding contract that keeps this sensitive information under wraps. Sometimes confidentiality clauses are also included within larger legal documents. Penalties for breaking an NDA are outlined in the agreement and can include consequential damages such as lost profits and other remedies. Some important elements that should be included in a non-disclosure agreement include:
- Definition of confidential information
- The terms and duration of the NDA
- Specific parties who may receive the confidential information
- Permitted use of information
- Return of the information
- Which court has jurisdiction over the NDA
- Acceptable remedies for violation of an NDA
- Responsibility for legal fees
- A non-binding clause
A contract or non-compete lawyer can help you understand exactly what these elements mean. They can also draft a non-disclosure that is tailored to meet your specific needs and circumstances.
When Do You Need an NDA?
There are many different situations in which a non-disclosure agreement may be appropriate. These are just a few common scenarios in which an NDA can protect your rights and interests, whether you’re the disclosing or receiving party.
When discussing the licensing or sale of a product, invention or technology. If you are considering selling or licensing a product or technology that belongs to your business, it is crucial to prevent potential buyers from using your information as leverage in negotiations with other companies or individuals. A plethora of information is exchanged during these types of discussions. An NDA can prohibit a potential purchaser from sharing sensitive financial data, proprietary information and even the name of your company with competitors.
When employees or outside vendors have access to proprietary information. Trade secrets and technology aren’t the only things that need to be protected. Employees and vendors you do business with may have access to client lists, supply chain and manufacturing agreements, and other sensitive information that could mess up your business if they decide to leave and take it with them.
When presenting an offer to a potential investor, partner or buyer. New ideas often require fresh perspectives and additional financing. Or maybe you’re ready to sell your business. These types of negotiations and discussions involve revealing a lot of sensitive information about your finances, products, research and development, personal information and maybe even your business succession plan. Making sure the information you share is protected is paramount to safeguard your business and its continued success.
Want to learn more about how an NDA can protect your business interests? Our law firm in West Chester can help.