As a business owner or intellectual property holder, how you handle proprietary information is key to protecting your interests. Thankfully, countless laws related to copyright, trademark and communications secure your information. One common tool many business owners use to protect their interactions with associates and third parties is a non-disclosure agreement (NDA).
NDAs are often used as a first line of defense for business owners, but are they overused? NDAs grant each party a certain set of rights and restrictions in business dealings. Mutual agreements should have a carefully defined purpose and definition to avoid potential conflict in the future between associates.
Defining purpose in nondisclosure agreements
NDAs include definitions, exclusions, obligations and duties, and timetables for enforcement between parties. Do the NDAs you write for your business or intellectual property include each of these clauses? If you believe something may be missing from an NDA, you're probably not alone.
Above The Law points out some of the most commonly overlooked elements of an NDA including:
- The definition of information
When you are involved in business meetings, you may spend some time brainstorming new ideas and processes. While you may come to the meeting with some more concrete ideas of what is happening, new ones could develop too. Does your NDA cover just already known information or does it also extend to information contemplated?
- When exclusions matter
Some disclosure of information may be required when it is already known to the public or when it is court ordered. Additionally, the ability of people to independently develop ideas should also be recognized in NDAs.
- The purpose of the information
You may use an NDA during a meeting to discuss interest in a potential business relationship. Do you want the NDA to dictate the information discussed in the meeting or define the relationship itself?
The most important note to remember is that careful review of all NDAs is necessary when dealing with new information and new partners. Businesses should not rely on templates to secure the information discussed between parties because a template can't take into account each scenario. Instead, NDAs require sensitive consideration of each interaction and relationship.