There is a way of protecting your great business ideas. A Confidentiality Agreement, sometimes known as a Non-Disclosure Agreement, is, as the name would indicate, an agreement that any confidential plans or ideas that you may have will be held by the other party in the strictest of confidence. Such an agreement, naturally, will only be effective if it is signed by the receiving party prior to disclosure of your ideas.
There are numerous instances where you may want to share confidential information with another party. Here are some typical situations where you may want to use a Confidentiality Agreement:
- Presenting an invention or business idea to a potential partner, investor, or distributor
- Sharing financial, marketing, and other information with a prospective buyer or co-venturer of your business
- Showing a new product or technology to a prospective buyer or licensee
- Receiving services from a company or individual who may have access to some sensitive information in providing those services
- Allowing employees access to confidential and proprietary information of your business in the course of their job
Confidentiality Agreements may be presented to new employees or used when companies are working on a joint business deal or a merger in which one company will be privy to the processes or procedures used by the other. From software programs to “secret” recipes, most businesses will typically have some confidential material that needs to be protected.
Such an agreement, drawn up with help from your attorney, will include:
- Specifically what material needs to be kept confidential
- Under what circumstances and in what manner any confidential information may be used or disclosed
- Your right to seek an injunction should the other party violate the agreement
- How any such dispute regarding the agreement will be settled
- A specific time frame including when the agreement begins and how long after your business interaction ends during which the recipient is obligated to keep all information confidential
The party receiving the confidential information then signs the agreement and is therefore bound by the contractual obligation not to disclose your information.
Many new businesses, particularly in the planning and development stages are very diligent about making everyone associated with the company as an employee or an independent contractor sign such an agreement.
Confidentiality Agreements can play a key role in your ability to maintain valuable intellectual property rights. Too often, inventors have been burned by disclosing an idea to a potential business partner or investor without taking the time to draw up such an agreement.
There is an unlimited range of material that can be deemed confidential. It is your decision as the business owner to determine what information could prove detrimental to your business or to you personally in the hands of another business or individual. You can also determine in which situations the material is confidential and where it may be used. For example, some information may become public knowledge through a public record filing and thereby cease to be truly confidential. It is then equally important to determine which individuals could, intentionally or unintentionally, use such confidential information for self gain or to secure an edge in competing with your business. These are the people you most want to sign and date the agreements. You will then keep them on file.
Click here to check out a Confidentiality Agreement.