In today’s business climate, innovation is fostered when companies with different talents and products join together to create new relationships. Any productive business relationship, like any marriage, depends on mutual respect, full disclosure and of course, money. With that said, disagreements may occur and legal rights may be questioned. Specifically, the parties may be at odds over what they own and may expose sensitive information that was shared during the course of the relationship.
When this happens, what is an aggrieved company to do?
This is where the old adage “an ounce of prevention is a pound of cure” comes into play. Companies that consider working together on new products or services tend to use non-disclosure agreements before engaging in a new relationship.
Essentially, a non-disclosure agreement is a contract that binds both parties to confidentiality regarding business secrets revealed during the course of a business relationship.
Non-disclosure agreements are commonly used to protect a business’ trade secrets, which cannot be protected under patent or trademark law. Such an agreement also gives a party legal recourse in the event the other party breaches (or threatens to use) confidential information discovered during the proceedings. Essentially, an aggrieved party can seek an injunction to stop the information from being publicly disclosed; and if so, there can be monetary damages that can be sought.
Indeed, non-disclosure agreements can take many forms, but the majority have the five same elements to them, including definitions on what is deemed to be confidential, how sensitive information is be kept, and how long the agreement will bind both parties.
If you have questions about a non-disclosure agreement, an experienced attorney can advise you.