Throughout the span of one’s professional career, a nondisclosure agreement (NDA) will likely present itself through an employer. By definition an NDA is, “A legally enforceable contract that creates a confidential relationship between a person who holds some kind of trade secret and a person to whom the secret will be disclosed” (RocketLawyer, 2015). NDAs are extremely common in many different business settings. They are also very common in startup companies who are just getting on their own two feet. They are common because they are necessary. They offer a way for employers to protect trade secrets and any other confidential information that is not meant to be shared with external parties. Information that is sealed through an NDA will likely include any intelligence regarding a new product, client information, sales or marketing plans, and any manufacturing processes. An NDA is used to keep secrets safe and underground. If the NDA is breached, the employer will have the legal resources to sue for any damages.
NDAs are brought forth for three key reasons. One, NDAs protect sensitive and new information. Upon signing an NDA, participants promise to not leak or release any sensitive information shared with them. If the private information is leaked or released, the injured party can claim breach of contract. Two, in the situation where a new product is in the works, an NDA can help the founder or inventor keep patent rights. In some instances, public disclosure of a new product can negate patent rights. A carefully drafter NDA can help the original inventor hold onto the rights to a product or specific idea. Lastly, NDAs specifically outline what information is private and what is considered ‘fair game’. In most situations, the NDA itself serves as a document that specifies exclusive information. NDAs specifically spell out that the person receiving the information is to keep it private. Which means that one cannot breach the NDA, encourage any individual to breach it, or allow any other individuals to access the information. The most important part of the NDA is that it is necessary for protection.
Furthermore, the specific type of information that is contained by an NDA is unlimited. Any knowledge exchanged between parties that are bound to the NDA can be considered confidential. Regardless of the exact function of an NDA, NDAs should contain certain parts within the contract, “Definitions and exclusions of confidential information; obligations from all involved people or parties; and time periods” (RocketLawyer, 2015). This particular element serves to create the rules of the contract without actually releasing the exact information. For example, an NDA for a private fashion designer’s clothing store might incorporate a statement such as, ‘Private information comprises client lists and sales history, financial information, inventory, and the creation of new clothes.
Time frames are also generally addressed in a nondisclosure agreement. They typically require the party receiving the information to keep the information private for a certain number of years. However, the specific information that is presented can be up for negotiation between the parties. Ambiguous terms can arise in this section of the NDA because the wording of the timeframe can trick the signee. For example, if an employee is terminated they might think the NDA is no longer valid, however the contract is valid until the expiration of the date stated in the NDA. Some NDAs do not state the terms if an individual who has signed an NDA is let go. This can be quite a surprise to a fired individual who has signed an NDA. Surprises like confusing wording regarding a timeframe are not usually common in NDAs. Nondisclosure agreements are usually very simple and not difficult. After all, if an individual is unsure if information is confidential or not, they can always ask.
Nondisclosure agreements and other confidentiality agreements are extremely common in today’s world. Any information protected by attorney-client privilege or even doctor-patient confidentiality is assumed to be covered by an NDA. Even librarians are obligated to keep information about customers book orders private. Other situations where information might be protected through an NDA includes, business models, plans for a new tool or equipment, any information about clients/customers, lab workers who can access test results, and even embargoed news releases (RocketLawyer, 2015). Any breach of an NDA will likely be settled in court if the provider of the NDA decides to sue for damages.
On the other side, a nondisclosure agreement can exclude vital information from protection. Exclusions might be considered information that is common knowledge or information collected before the agreement was even signed. This is where the majority of trouble arises from a breach of an NDA. Complications can arise between both parties because the confidential information that should stay protected is not always accurately communicated. To avoid this, employers or any party looking to protect information should always sit down with the individual and go over the NDA together. Any information that must be kept private or anything of importance from the creator of the NDA should highlight or bold statements that must be acknowledged. The NDA should avoid tricky wording and should be straightforward and not up for interpretation. The most concerning part regarding an NDA is the language that is stated within it. Often times the language can be interpreted in a variety of different ways and can confuse the individual signing the NDA. Clear and concise language should be used in a nondisclosure to avoid any confusion. This will avoid any misconceptions that an individual might have after signing the NDA.