The Role of Non-disclosure Agreements in Protecting Company Secrets

Non-disclosure Agreement

All the businesses have some valuable and confidential information that should be preserved within a certain range of people and must not be available to the public. The information mostly includes innovative ideas, customer lists, sales plans, special manufacturing secrets or product formulas. A non-disclosure agreement (NDA) is a legal document that keeps a company’s secret information strongly under control.

Business owners usually have to share some of the confidential information when seeking new investments, negotiating with potential partners, obtaining new customers or hiring employees. In similar situations, non-disclosure agreements have always been an important legal framework preventing any confidential information outflow. For example, when a start-up company seeks to raise money from investments, it can have its business idea stolen in lieu of receiving investment. However, having an NDA signed with future investors will legally preclude business idea theft. Here are some common situations when an NDA can offer effective protection for your company’s confidential information:

-Making your invention or business idea available to a potential partner, investor, or distributor
-Sharing financial, marketing, and other information with a prospective buyer of your business
-Representing a new product or technology to a prospective consumer or licensee
-When employees have access to confidential and proprietary information.

When an NDA is signed between parties, each of the parties is guaranteed by the law that the other one is forced not to disclose or use the confidential information he/she is provided or shared with. An NDA also comprises certain terms specifying penalties for the agreement breaching party. Failure to have an NDA can backfire and cause a lot of headache for a company in the future.

Trade secrets and intellectual property are the most valuable assets of any company. Thus, it is crucial to have a strong NDA to protect them. The role of NDA’s in today’s business world should not be underestimated. A non-disclosure agreement is a low-cost, yet a very effective way to protect your business ideas and other essential confidential information from being leaked out.

Just like with any other legal document, consulting a lawyer when drafting or entering into an NDA is strongly recommended. The knowledgeable and experienced lawyers at the Margarian Law firm will provide you with qualified legal counsel in drafting a good NDA that will strongly and safely protect your company’s confidential information.

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