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Getting that nondisclosure agreement right is essential

Trade secrets are one of a company’s biggest assets. While trademark law and intellectual property law protect signature products and services, some companies do not take the necessary care in addressing non-disclosure agreements that protect trade secrets. The confidential information employees are often involved in include marketing plans, business plans, financial information, customer databases and other sensitive information. Generally speaking, trade secrets are defined as information that is not generally known and the owner takes great pains to keep that information private.

Why NDAs need to be carefully crafted

By not defining what is to be protected, how it is to be protected and for how long it is to be protected, some believe that NDA actually can cause more problems than it prevents. One recent article broke down this concept clearly by applying three important tips for avoiding future problems:

  • Definitions matter: Rather than use vague language, it is best to define the nature of the trade secret and the signee’s responsibility.
  • Avoid term limits: Avoid termination limits when drafting the agreement, or determine the appropriate length of time for the information.
  • Be careful with exclusions: Some exclusions from the definition of confidential are unavoidable, or perhaps some may enter the public domain during the term. Make sure to consider this issue in any qualifiers and then make sure other trade secrets and confidential information remains protected by ongoing protection.

The circumstances will be different each time

Those companies who use NDAs, and many companies should, are always best served when they work with an attorney who has experience drafting and enforcing these agreements on an ongoing basis. They can recognize issues and sticking points or undefined details, ideally addressing them before the information is no longer worth protecting.

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