A non-disclosure agreement is necessary to protect trade secrets. A non-disclosure agreement ensures that the person about to be made privy to the information is aware of its importance and informed of the consequences of telling anyone else about the information. A non-disclosure agreement should include a description of confidential information, a sweeping statement for additional information, a specification of uses for trade secrets, and the consequences of leaking a trade secret.
Description of Confidential Information in a Non-Disclosure Agreement
The first part of the non-disclosure agreement is a description of the information to be disclosed. Remember that this section describes the information, it does not give the information itself. An example description would be: “Technical and business information relating to Discloser’s proprietary ideas, patentable ideas, copyrights and/or trade secrets, existing and/or contemplated products and services, software, schematics, research and development, production, costs, profit and margin information, finances and financial projections, customers, clients, marketing, and current or future business plans and models, regardless of whether such information is designated as 'Confidential Information' at the time of its disclosure.”
Sweeping Statement for Additional Information in a Non-Disclosure Agreement
It is also a good idea to cover any additional future confidential information releases with an explanation of how they will be presented. An example would be: “In addition to the above, Confidential Information shall also include, and the Recipient shall have a duty to protect, other confidential and/or sensitive information which is (a) disclosed by Discloser in writing and marked as confidential (or with other similar designation) at the time of disclosure; and/or (b) disclosed by Discloser in any other manner and identified as confidential at the time of disclosure and is also summarized and designated as confidential in a written memorandum delivered to Recipient within thirty (30) days of the disclosure.”
Specification of Uses for Trade Secrets
Always list precisely what the employee may and may not do with the information. For example, if this employee is privy to information that no other employee is aware of, he obviously cannot share the information with other employees. If you want to further limit the disclosure, you can require that the employee not disclose the trade secret to anyone without your consent.
Consequences of Leaking Trade Secrets
The final provision that should always be placed in the non-disclosure agreement is a list of consequences if the person attempts to leak the information. This section of the non-disclosure agreement typically includes loss of employment, injunctions, and civil penalties.
Getting Help
If you have questions or concerns about non-disclosure agreements, make sure to contact an attorney in your area.