Nondisclosure Agreements in Your Business

Almost every business has information it considers confidential or proprietary.  This may be information sufficiently secret and valuable to be considered a trade secret.  It may also be other information you would rather not have available to your competitors, such as customer lists or specific methods for doing what you do. 

What is Confidential Information?

Information does not necessarily have to qualify for trade secret status to be protected under a nondisclosure agreement.  Usually the NDA itself will define what the parties agree is confidential.  In general, anything that has value to your business and is not publicly available can be considered confidential.  The most common examples we have seen include:

• Customer lists and information about buying history;
  
• Prospect lists;
  
• Strategic planning documents and information, including market research;
  
• Methodologies and procedures used in your business;
  
• Vendor agreements and pricing information;
  
• Financial information about your business;
  
• Employee information;
  
• Information in your CRM;
  
• Marketing strategies; and
  
• Technical innovations developed in your business.
  

Information that is already readily found in the public domain cannot be protected by an NDA.  Similarly, if you have given information to someone without requiring them to agree to an NDA, they can't be barred from using it.

When Should You Use an NDA?

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If you have employees, by necessity they will have access to information you consider confidential.  This is why many employers have confidentiality agreements with their employees, particularly higher level employees who have access to more sensitive information.  These are enforceable under Massachusetts law.  They are also helpful in setting the expectation from the beginning about what you consider confidential.

You may also find yourself in discussions with other businesses about potential acquisitions or joint ventures.  Even negotiating a garden variety services contract, you may need to share information that you would otherwise consider confidential.  This is why it is common to enter into a simple NDA ahead of those discussions, so both parties can feel free to share relevant information without fear of it being disclosed or used in another context.

Trade Secret Protection and NDAs

If something qualifies as a trade secret, it is protected from unlawful disclosure under law.  However, one of the requirements of a trade secret is that you have used reasonable efforts to safeguard its secrecy.  If you do not have nondisclosure agreements in place with your employees, or if you share information with another business without one, you could lose this protection over your most secret and valuable information.

What Should Be Included in Your NDA

As a contract, your non disclosure can include just about anything that the parties agree to.  As a starting point, here are the basic ingredients you should be sure to include:

• A definition of confidential information.  This will typically be stated broadly, followed by a non-exclusive list of things that are examples of confidential information.
  
• An acknowledgment by the receiving party that they are being given access to confidential information in connection with their employment, or the specific negotiations that are taking place.
  
• An agreed method for a party providing confidential information to marl or designate it as such.
  
• An agreement by both parties not to use confidential information for any purpose other than the one the NDA governs.
  
• A specific enforcement mechanism.  For example, what law governs, what court can you bring an action in, and will the losing party have to pay the other side's legal fees. 
  

• An agreement about what happens to the confidential information when the relationship or negotiations are complete.  Ideally, the parties to a business negotiation agree to return or destroy copies of the other side's information.  In the employment context, employees are usually required to return all company property and information at the end of the employment relationship.
  

How We Can Help

We can help review a non disclosure agreement that someone has asked you to sign, or design an NDA that meets your business needs.  You can use the button below to schedule a call back from a member of our team, or give us a call at  781-784-2322.

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