How Effective are Non Disclosure Agreements?

June Campbell
 


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Many businesses and entrepreneurs rely on non disclosure agreements to protect their trade secrets, intellectual property, financial information, unpublished patent applications, processes or other material.

For example, suppose you are developing a prototype of a revolutionary new product that will make you a small fortune. However, you need to engage a consultant to advise you one a certain component before you can complete the prototype. You might ask the consultant to sign one of your non disclosure agreements to ensure he or she doesn’t reveal your confidential information to your competitors.

Or suppose you are contracting with a copywriter to create the sales letters and email messages to use when you launch your new product. You have a big launch planned and you don’t want word to get out about your innovative new product. The copywriter writes for many of your competitors. Although you trust him to be discrete, you know that slips of the tongue can happen. You could ask the copywriter to sign your non disclosure agreements.

How effective is this?

First, realize that non disclosure agreements are legal contracts. Like any contract, they are only as valuable as your ability to enforce them. In event of dispute, you would take your case before the courts and ask the courts to rule and to decide upon a settlement.

You could try taking a case to court without a signed confidentiality agreement in place, but in that situation, your chances of having the courts award in your favor are slim. Your chances increase dramatically if you have a well written confidentiality agreement. Moreover, the act of signing an agreement increases the chances that a third party will keep your secrets and will not let something slip unthinkingly.

Good non disclosure agreements have at least three main components. First, they explain and itemize the nature of the material that is to be kept confidential. Secondly, they outline the possible exceptions, and thirdly, they outline your expectations of how the third party will use and safeguard your confidential information.

Regarding the exceptions, realize that courts are unlikely to award in your favor in certain situations. For example, if the third party can demonstrate that the information was public knowledge, they have a good case. Or, if the third party can show they already had the information before they became involved with you or before they signed the agreement, they have a case. Or, if they can show they obtained the information from another party, they are on good footing. Lastly, in event of a subpoena, the courts will almost always rule that a subpoena overrules your contract.

Non disclosure agreements are effective for those who understand the implications.

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Protect your confidentiality with a lawyer- approved non disclosure agreement. For sample non-disclosure agreements and other business documents, visit Business Writing by Nightcats Multimedia.

http://www.nightcats.com
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