Non-Disclosure Agreements Protecting Trade Secrets

Trade secrets are a type of intellectual property. They are considered business assets, just like other intellectual property. Formulas, manufacturing assets, customer lists, and sales plans are all examples of trade secrets. To be considered a trade secret, information that provides an economic advantage must also be the subject of reasonable efforts to keep it secret. However, in order to run a business, you may have to reveal a trade secret to employees, vendors, suppliers, or other companies.

An NDA is a contract in which the contracting parties promise to keep secret information disclosed to them confidential. The contract establishes a private relationship. The NDA can be mutual, with both parties exchanging secrets, or it can be one-way, such as when you disclose confidential information to an employee to help your business grow or develop a product. The agreement should be in writing because the contents of a written document are easier to prove than the nature of a conversation. The NDA ensures that your secrets are kept private, and if they are not, you have legal recourse against the person or entity who revealed them.

What Should a Non-Disclosure Agreement Contain?

In general, having an experienced attorney draught your non-disclosure agreement is a good business practise. If the agreement needs to be enforced, an attorney can anticipate how the court will interpret it and make the language as strong as possible.

The party receiving the information must agree to keep trade secrets confidential, not breaching the confidential relationship or inducing others to obtain the secret illegally. An NDA frequently requires the party receiving the information to limit its use to situations authorised by the other party.

It is critical to have a thorough explanation of what is to be protected, but this is usually a list of categories of information to be kept secret, rather than the trade secrets themselves. Financial data, customer lists, manufacturing processes, and innovative methods are examples of categories.