Non-Disclosure Agreement

Non-disclosure agreements (NDAs) protect information shared in commercial negotiations, collaborations, investment talks, software projects and employment. They may be one-way (only one party shares information) or mutual.

Key Terms

• Definition of confidential information: Should be specific. Overly broad definitions make breach hard to prove; overly narrow ones leave gaps.
• Exceptions: Publicly available information, information already known to or independently developed by the recipient, information lawfully obtained from third parties and information that must be disclosed by law.
• Permitted purpose: Use of the information only for a defined purpose.
• Access: Employees and advisers who may access the information, and their own confidentiality obligations.
• Duration: Confidentiality during and after the relationship.
• Return and destruction: Return or destruction of documents when the relationship ends.
• Remedies: Contractual penalty, damages and interim injunctions.

Relationship with Trade Secrets

An NDA is the most important evidence of the “reasonable measures” taken to protect trade secrets. Even without a contract, unfair competition and employment law provide protection; but an NDA clarifies the scope and makes proof easier. Disclosure of trade secrets may also be a crime; see Disclosure of Trade Secrets.

Personal Data

If shared information includes personal data, an NDA alone does not satisfy data protection obligations. Where there is a processor relationship, a separate data processing agreement is required.

Remedies for Breach

Claims for damages or the contractual penalty, an interim injunction to stop continuing breach and, where applicable, an unfair competition action. Keeping records of who accessed the information and when is important for proving breach.