Understanding Your Confidentiality Agreements
The Non-Disclosure Agreement (NDA), also known as a Confidentiality Agreement, is one of the most fundamental tools for protecting your company’s valuable intellectual property (IP) and sensitive information. But is your NDA providing the complete protection you think it is?
In this essential video, Phil Crowley, founder of Crowley Law LLC and an experienced corporate and IP lawyer, highlights a critical distinction: a truly effective agreement should be a Non-Disclosure and Non-Use Agreement.
The Two Pillars of Confidentiality: Non-Disclosure vs. Non-Use
Phil explains that this vital agreement places two key obligations on the party receiving your confidential information:
Non-Disclosure: Keeping Information Secret
The recipient is legally bound not to disclose the confidential information to any unauthorized third parties.
Non-Use: Preventing Unauthorized Exploitation of Your IP
Crucially, the recipient is also bound not to use your confidential information for any purpose other than the specifically designated reason for the disclosure (e.g., evaluating a potential business relationship).
Why “Non-Use” is Indispensable for Your Competitive Advantage
Without it, a party could technically keep your information secret but still use it for their own benefit, potentially undermining your competitive advantage.
Key Scenarios Where Robust NDAs Are Essential
Phil discusses common scenarios where robust Non-Disclosure and Non-Use Agreements are indispensable:
Preliminary Business Negotiations (M&A, Partnerships, Investments)
During the early stages of discussions for a potential acquisition (M&A), partnership, or significant investment, where sensitive information is exchanged but public knowledge of the talks is undesirable.
Protecting Pre-Patent Inventions and Novelty
When disclosing key elements of an invention to potential partners, manufacturers, or investors before a patent application has been officially filed. This helps protect the novelty and patentability of your invention.
The Bottom Line: Safeguarding Your Intellectual Property
To truly safeguard your valuable intellectual property and confidential business data, ensure your agreements explicitly cover both non-disclosure and non-use.
If you’re an innovator, entrepreneur, or business owner regularly sharing sensitive information, understanding this distinction is key to effective IP protection.
