Arizona companies often have trade secrets – processes, formulas, designs, patterns, instruments or information that are not public knowledge. These trade secrets are known only by the company and cannot be shared with others because there is a risk of competitors stealing business away.
Employees must be able to keep this information secret and avoid disclosing it to others. To enforce this confidentiality, companies may have their employees sign nondisclosure agreements. Read on to learn about the benefits of NDAs and how they protect intellectual property.
When a company is approved for a patent, it becomes part of the public domain and anyone can access it. Trade secrets, on the other hand, are secret, hence the name. These do not have to be disclosed outside the company and can be protected with an NDA.
An NDA is mostly used for the protection of intellectual property, but it can also create a confidential relationship with a vendor or third party with whom the company does business. Oral agreements should not be trusted – everything should be in writing to make it legally binding.
An NDA typically includes several elements. It will define what information is considered confidential and list any exclusions. Detail is especially important here, since what an employee considers confidential and what a company considers confidential may be totally different.
The document will also define the obligations of the employee and list the dates of validity. If there are any other duties or rules by which the employee must abide, those will also be included in the NDA.
NDAs must contain proper language in order to be valid. Certain language, or the lack thereof, can make an NDA worthless, so review it carefully before handing it over to an employee or third party. But with the right steps, an NDA can be a valuable tool to help protect proprietary information and keep a company profitable for many years to come.
Source: FindLaw, “A Nondisclosure Agreement” accessed Feb. 15, 2015
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