Why Standard NDAs Aren’t Always Enough to Protect You
A nondisclosure agreement, also called a confidentiality agreement, is a contract between two or more parties that seeks to prevent the unauthorized disclosure and use of specified private information. It is an invaluable tool for protecting confidential information, such as trade secrets, proprietary information, business information, and intellectual property.
Despite their usefulness, nondisclosure agreements have multiple risks that may limit the protection of your confidential information. With extensive experience drafting and enforcing these agreements for tech and life sciences companies, Crowley Law LLC can help you avert these risks and protect your sensitive information from public knowledge.
When to Enter Into a Nondisclosure Agreement
The situation necessitating a nondisclosure agreement often directly contributes to the number and severity of risks. Based on our experience, there are at least nine main reasons for entering into such an agreement:
- Confidentiality and non-use assurance
When you need to legally require specific parties in a business relationship, refrain from disclosing confidential information. - Securing intellectual property
When you desire to safeguard your intellectual property, proprietary information and trade secrets from unauthorized use or disclosure. - Employment agreements
When you wish to prevent employees from misusing or sharing confidential information like client lists during and after their employment. - Vendor relationship
When engaging with vendors, contractors or suppliers that may require access to your company’s trade secrets and sensitive information. - Investor relationship
When pitching your business idea to potential investors, whereby you share confidential information like financial data and business plans. - Technology protection
When you need to protect the technological innovations, product designs or software algorithms developed by your life sciences or other technology company during a discussion of a technical collaboration with another company. - Mergers and acquisitions
When you wish to protect confidential information, such as strategic plans, during merger or acquisition discussions.
Main Risks in Nondisclosure Agreements
Crowley Law LLC actively helps life sciences and other technology companies identify and mitigate risks associated with their confidentiality agreements and nondisclosure contracts. Some of the notable challenges and risks we have flagged while working with our clients include:
Defining Confidential Information
Arguably, the biggest challenge with nondisclosure agreements is clearly defining what is considered confidential. Ambiguous definitions can make it challenging for the parties involved to understand their responsibilities. The low clarity can lead to misunderstandings and conflicts, which are highly detrimental to productive business relationships.
Defining Appropriate Time
Determining the appropriate term length for a nondisclosure agreement is usually challenging. There is an inherent risk of having a contract that is either too short or too long. You must strike a balance to ensure that confidential information is protected for as long as possible and that the parties involved do not abandon the contractual protections too soon.
Educating the Receiving Party
In many instances, the recipients of nondisclosure agreements fail to understand the implications of signing these types of contracts. It is your duty to highlight the importance of the agreement and the consequences of any breach. Most importantly, you should educate the recipients to help them make sound decisions, avert misunderstandings and disputes and protect your confidential information.
Enforcing Nondisclosure Agreements
Having recipients sign nondisclosure agreements does not always guarantee the safety of your confidential information. For example, confidential information may be difficult to quantify or prove, and breaches may be challenging to detect. You will need legal help to ensure the enforceability of your agreements.
Addressing Concerns Related to Public Policy
Your nondisclosure or confidentiality agreement could possibly clash with public policy. For example, preventing your employees from reporting unethical workplace activities may contravene public policies on the integrity of work environments. To avoid such issues, you must thoroughly understand the ethical and legal considerations affecting your agreements.
How Crowley Law LLC Can Help
Regardless of the type of confidential information and the parties you intend to share the information with, you will need legal assistance drafting a comprehensive nondisclosure or confidentiality agreement that mitigates potential risks. Crowley Law LLC is ready to be your legal counselor as you quest to protect your valuable information through appropriate written agreements. Here are some of our relevant services:
- Preparing and advising on the agreements
We help businesses draft, review, and update nondisclosure agreements based on their unique needs. We also assist disclosing parties and recipients in understanding their rights and obligations. - Ensuring clear and precise language
We help you provide clear and precise language in your agreements, reducing ambiguity that could cause misunderstandings or legal disputes. - Determining a clear scope and duration
We offer reliable advice on setting reasonable limits to confidentiality obligations. We also ensure the scope of your contracts is neither too narrow nor too broad, which could be challenged in court. - Identifying hidden risks
We help life sciences and other technology companies identify potential risks specific to their agreements and industries. We also provide guidance on how to ensure that confidentiality agreements do not overreach or infringe on rights protected by law. - Advising on ethical considerations
We offer advice on the ethical and legal repercussions of having agreements that are overly broad and could be implicated as efforts to cover up illegal or unethical behavior. By doing so, we help our clients avoid legal penalties and reputational damage. - Training and education
We deliver customized training and education programs to companies and individuals on the proper use and limitations of nondisclosure contracts. We also offer education and advice on each party’s rights and responsibilities.
FAQ
What Happens if the Other Party Won’t Sign an NDA?
For vendors, you may disqualify them or restrict disclosure of the subject trade secret or confidential information. For venture capitalists and angel investors, you can forego the agreement if other protections can be put in place to minimize unnecessary disclosures and protect business interests.
Do I Need an Attorney When Drafting a Nondisclosure or Confidentiality Agreement?
You are not legally required to engage an attorney when drafting or signing the contracts. However, legal assistance is critical to obtain a properly drafted agreement with a clear scope and term length and to ensure your interests are protected.
