Such confidential information may include trade secrets, intellectual property and other information contributing to your competitive edge. With extensive experience drafting and enforcing nonuse and nondisclosure agreements, Crowley Law LLC can help protect your confidential information from unauthorized disclosure.
A nondisclosure agreement, sometimes called a confidentiality agreement, is a contract between two or more parties that regulates the treatment of specified private information to prevent unauthorized disclosure and use.
A nonuse contract is similar to a nondisclosure agreement in that it protects confidential information. However, a nonuse agreement specifically prohibits the recipient from using confidential information for any purpose other than what the disclosing party explicitly allows. From our experience, a nonuse clause is often included as part of a nondisclosure agreement, eliminating the need for multiple contracts.
A noncompete agreement restricts former employees from engaging in certain competitive activities for a specified period after leaving a company. As of April 23, 2024, the Federal Trade Commission (“FTC”) had banned most noncompetes in the United States. The rule will take effect on September 4, 2024. Thus, Crowley Law LLC recommends terminating any noncompete agreement with your employees before the September deadline.
Crowley Law LLC recommends including the key elements of a confidentiality agreement as part of your nondisclosure agreements. These include the definition of confidential information, confidentiality obligation, exceptions, ownership information, term length and remedies.
If you need a more detailed guide to drafting an entire nondisclosure agreement, here are the Crowley Law LLC recommended steps:
State the names and contact information of all parties involved. Also, include the agreement’s effective date.
Note that the disclosing party (your company) should be referred to as the “Client,” while the recipient (employees) will be referred to as the “Employee” in the rest of the document.
Define what is deemed confidential information, including trade secrets, proprietary information, intellectual property or financial data.
Define in which forms the recipient will not be allowed to disclose confidential information. A nonuse clause preventing the use of sensitive information can be included in this step.
Specify the period of confidentiality or nonuse. The period typically starts on the effective date and most agreements run in perpetuity.
State any exclusions from the agreement. Note that exclusions refer to situations where the recipient will be allowed to discuss or use the confidential information.
Include a clause about the disclosures mandated by law. For instance, you may specify that the recipient (employee) must promptly alert the disclosing party (your company) in case of a court order requesting access to the confidential information.
Disclose the ownership of confidential information and state that the receiving party is not allowed to keep or multiply it.
Add an injunctive relief clause that prompts the receiving party to acknowledge the irreparable damage of divulging confidential information without the disclosing party’s prior written consent.
The receiving party should also be prompted to accept that the disclosing party is entitled to injunctive relief if they breach the agreement.
State the names and contact information of all parties involved. Also, include the agreement’s effective date.
Note that the disclosing party (your company) should be referred to as the “Client,” while the recipient (employees) will be referred to as the “Employee” in the rest of the document.
Add a non-solicitation clause to prevent the recipient from using your customer lists to approach and “steal” your clients. Note that this clause is different from the now illegal noncompete clause.
Address the indemnification in your agreement. This fundamentally covers the consequences of a breach by either of the two parties.
Add a governing law section to specify under which law the agreement is created and enforced.
Include an entire agreement clause, which states that the contract contains the complete understanding between all parties involved.
Include a severability clause to protect the agreement’s validity if one section or part of it is deemed illegal or invalid.
This provision can protect your agreement and all parties from future regulatory changes, such as the recent banning of noncompete agreements and clauses.
Review the entire agreement to ensure enforceability, maximum protection for your confidential information and the inclusion of all relevant clauses.
Drafting confidentiality agreements is highly complex, with several applicable laws and regulations that you must follow. You need an attorney to help draft enforceable agreements that will offer maximum protection to your confidential information, be it a trade secret, a unique know-how or any other information you deem sensitive and critical to business success.
Crowley Law LLC is ready to be your legal partner as you aim to build a productive business relationship with your internal and external stakeholders while ensuring your sensitive information and business strategies remain confidential. Here are some of the ways we can help:
We can draft contracts that are tailored to your business or personal situation. We can also ensure that your contracts comply with relevant laws and regulations, which can vary by jurisdiction.
If you are asked to sign a nonuse and nondisclosure contract, we can review it to ascertain that the terms are fair, clear and not overly restrictive. We can also help you understand the implications of your agreement.
We can help you enforce your contract when a party violates the terms of your contract. For example, we could send cease-and-desist letters or pursue litigation to seek equitable relief or monetary damages for a confidentiality breach.
We can explain your rights and confidentiality obligations under your contracts. For instance, we can advise on how to share confidential information when a need arises. We can also offer ongoing legal support as your needs as the business evolves.
As of April 23, 2024, the FTC had banned most noncompete agreements, especially between employers and employees. Consult Crowley LLC to determine if you may qualify for any special exemptions to the ban.
Yes. The ban on noncompete agreements does not apply to specific industries exempted from the FTC Act, including banks, savings and loan institutions, federal credit unions, common carriers, air carriers and persons and companies subject to the Packers and Stockyards Act. Besides these sectors, the ban does not affect existing agreements with senior executives, noncompetes related to the bona fide sale of businesses and noncompetes enforced where the cause of action accrued before the had taken effect.
There are many instances where such a contract may be appropriate. In general, the contract makes sense when you wish to convey something valuable about your business or idea to other parties but still wish for the confidential treatment of all the shared information. For example, you may need a nondisclosure agreement with a prospective buyer during a merger or acquisition.
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