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.
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 idea to established companies in order to bring their idea 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.
When using 3rd party vendors – There are many situations in which businesses use 3rd 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.
A non-disclosure agreement can be an extremely effective tool in protecting the intellectual property of an individual or business. They are often employed 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. To schedule a free initial consultation with Mr. Weisblatt, call our office today at 713-666-1981.