A non-disclosure agreement, or NDA, is a type of contract that prevents one or more parties from disclosing information to a third party. NDAs can be unilateral (meaning that one party shares information and the other party is prohibited from disclosing it) or bilateral (which means that both parties are prevented from sharing disclosed information with a third party). These agreements are used in the business context to prevent the disclosure of proprietary information that has value because it is secret or that could benefit competitors. Some of the more common situations in which NDAs are employed are discussed below.
For help dealing with challenges related to non-disclosure agreements, contact The Weisblatt Law Firm to discuss your case. Attorney Andrew Weisblatt is ready to listen and come up with effective solutions you can use. Call (713) 666-1981 today.
When Pitching an Idea
Many ideas for new and useful inventions come to people who lack the knowledge or resources to execute the idea. As a result, many inventors need to license their ideas to established companies in order to bring their ideas to market. One of the ways to be able to pitch an idea to potential licensees is to have them sign an NDA. If they breach the terms of the NDA, you will likely be able to recover damages.
When Employees Have Access to Proprietary Information
Employees often have access to proprietary information in the form of manufacturing techniques, customer lists, software, recipes, and others. Businesses can protect themselves from employees’ sharing these trade secrets with competitors by having them sign an NDA as a condition of employment.
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When Using Third-Party Vendors
There are many situations in which businesses use third-party vendors to outsource certain tasks. In some cases, effectively outsourcing these tasks requires the disclosure of secret information. As a result, it is important for businesses to have any third-party vendors with whom they closely work sign an NDA to prevent the disclosure of their trade secrets.
Essential Elements of a Non-Disclosure Agreement
Do Not Overlook These Important Details
Are you wondering whether an NDA would be appropriate in your situation? Consulting with an experienced business attorney will give you the guidance you need to make an informed decision. An attorney will also ensure that the final draft of the NDA fully protects your interests. Any non-disclosure agreement you draft must contain the following elements to be valid.
Description of Information to Be Protected
A description of the information to be protected defines the scope of the NDA. Parties often use catch-all terminology and clauses to avoid leaving important items unprotected. However, specificity is also required in many NDAs when only certain pieces of information — but not others — are meant to be kept secret.
Duties of the Parties to the NDA
The terms of the NDA should clearly outline the duties and obligations of each party. Generally speaking, those required to protect sensitive information must take reasonable steps to do so. Clear contract language is often necessary to define precisely what these reasonable steps are.
The Term of the NDA
NDAs typically include a specified time period detailing the dates of commencement and termination of the agreement. This time period typically covers three to five years in many situations. However, there is no set rule regarding the duration of NDAs. They can be drafted to last indefinitely.
Exceptions to the NDA
Some non-disclosure agreements allow for exceptions. For example, third-party servicers and providers often need access to certain proprietary information to fulfill contracts properly. Any exception to the agreement must be explicitly detailed within the terms of the NDA.
Consequences of Breaching the NDA
All parties to an NDA should be aware of the consequences of a breach of the agreement. Consequences should be clearly explained within the body of the document. Common repercussions of breaching an NDA include liquidated damages, injunctive relief, contract termination, and payment of attorney’s fees and court costs.
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Protect the Value of Your Business
A non-disclosure agreement can be an extremely effective tool in protecting the intellectual property of an individual or business. They are often employed at every stage of operations, from pitching an idea to potential investors to ensuring that former employees do not disclose information to competitors. Houston business attorney Andrew Weisblatt has been helping people with their business law and litigation since 1992.
The Weisblatt Law Firm can help you protect your business with meticulous and airtight NDA counsel and drafting. To schedule a consultation with Attorney Andrew Weisblatt, feel free to contact our office anytime. Call (713) 666-1981 today. Phone consultations are free.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio