{"id":4925,"date":"2016-04-04T10:47:49","date_gmt":"2016-04-04T15:47:49","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/intellectual-property\/a-nondisclosure-agreement.html"},"modified":"2024-05-22T02:15:26","modified_gmt":"2024-05-22T07:15:26","slug":"a-nondisclosure-agreement","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/intellectual-property\/a-nondisclosure-agreement.html","title":{"rendered":"A Nondisclosure Agreement"},"content":{"rendered":"\n
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A Nondisclosure Agreement<\/h1>\n
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Generally speaking, nondisclosure agreements are contracts in which a party (normally an employee) promises to protect the confidentiality of a secret<\/a> that is disclosed to him or her during the course of their employment, or during another business transaction. If you have a nondisclosure agreement with someone who then later uses your secret information without your authorization, you can make a request to a court to stop the person from violating the nondisclosure agreement. In addition, you can often sue the offender for any damages you suffered as a result of the breach of confidentiality.<\/p>\n

The use of nondisclosure agreements within employment contracts<\/a> has grown in tandem with the growth of the high tech and information-based fields. Entrepreneurs and employers should be aware of how to properly use them.<\/p>\n

Trade Secret Protection<\/h2>\n

Perhaps one of the biggest uses for nondisclosure agreements is in the protection of trade secrets<\/a>. Unlike patents, which must be part of the public domain, trade secrets are, by definition, secret. In addition, trade secrets are only afforded protection if the owner takes measures to keep the secret and the secret gives the owner an advantage in the marketplace.<\/p>\n

Creating Confidential Relationships<\/h2>\n

Perhaps the real purpose of nondisclosure agreements is to create confidential relationships<\/a> between the party that holds the trade secret and the party to whom the trade secret is disclosed. Parties that contract into such relationships have a legal duty to keep the confidential information in confidence.<\/p>\n

In addition to written nondisclosure agreements, confidential relationships can also be created by an oral agreement, or can be inferred by examining the conduct of the parties. However, it is not advisable to rely solely on such means to create a confidential relationship because they are notoriously difficult to prove.<\/p>\n

There are generally two classifications that a nondisclosure agreement can fall into — either "mutual" or "one-way." A mutual nondisclosure agreement is one where two parties to the agreement both disclose confidential information to each other. For example, a mutual NDA could be found when an inventor discloses his invention to a company in exchange for the company disclosing their secret client lists to the inventor.<\/p>\n

What are more common in employment settings are one-way NDAs. These are found when an employer requires a nondisclosure agreement from the employee in exchange for providing employment.<\/p>\n

What Goes Into a Nondisclosure Agreement<\/h2>\n

When you go to work for a company that requires you to sign an NDA, or you are a company looking to hire employees under a nondisclosure agreement, you will generally see at least five basic elements in the nondisclosure agreement. These are:<\/p>\n