How non-disclosure agreements can protect a business’s interests

| Feb 5, 2021 | Employment Law |

Many workers assume that employers or business partners use non-disclosure agreements (NDA) to cover up improper or questionable behavior. But rather than covering up charges of harassment, businesses often use these agreements to keep trade secrets, proprietary information or intellectual property from falling into the hands of competitors.

Companies will often ask employees, vendors, business partners and others to sign these agreements before sharing sensitive information. These agreements can be the foundation for a successful business relationship by imposing legal consequences for violating the contract.

Common examples

An NDA can protect specific information that gives a business an advantage in the marketplace. Examples include:

  • Sales contracts or client information
  • New products or services in development
  • Manufacturing designs and procedures
  • Unique recipes, special ingredients or secret formulas
  • Non-public accounting

What they may not cover

Non-disclosure agreements are not used for anything that is considered common or public knowledge. Some topics not protected by an NDA include:

  • Any information that the company takes no steps to protect
  • Any information gained before, after or outside the instatement of the NDA
  • Information that is filed with the U.S. Securities and Exchange Commission (SEC) or included in other public filings
  • Evidence from a court subpoena

Enforcing an NDA

The agreement should spell out how to address and resolve disputes and the specific consequences for breaching the contract. Unduly harsh or broad conditions have less chance of enforcement — the courts often favor those seeking new employment in a similar position or new business prospects over employers. Nonetheless, an NDA can be useful for protecting a business’s secrets and interests when skillfully drafted to address the company’s unique needs.

Those concerned about drafting, signing or enforcing an NDA can get answers by speaking with attorneys who regularly handle this type of contract. Qualified legal professionals can weigh a dispute’s details and a company’s concerns to provide knowledgeable guidance based on real-world experience.