Definition of Confidential Information NDA
The definition of a confidential information nda is a legal contract that prevents one party from sharing another's confidential business information.3 min read updated on February 01, 2023
The definition of a confidential information non disclosure agreement is a legal contract that prevents one party from sharing another's confidential business information.
Non-disclosure Agreement (NDA)
A non-disclosure agreement (NDA), also known as a confidentiality agreement, is an agreement between two people that prevents either party from sharing confidential information. When signing an NDA, you are agreeing you will not share any confidential information with others. NDAs are usually broken up into two different types:
- Unilateral: In this agreement, one party signs a contract stating that they will not share confidential information. This type of agreement is usually between an employer and an employee or a client and a vendor.
- Mutual: In a mutual agreement, both companies agree not to share confidential information. This type of NDA is less common but is used when two companies are considering working together.
The goal of an NDA is to prevent a business's intellectual property or secrets from becoming known to the public.
Purposes of An NDA
NDAs may be signed either when hiring a new employee or after an employee has decided to leave the business. NDAs serve the following purposes:
- Keep sensitive information confidential: An NDA is a legal promise that all confidential information will remain confidential.
- Maintains patent rights: Public knowledge of inventions can make it difficult to obtain a patent on a product. An NDA can protect an inventor and their ability to patent a product.
- Defines what terms are confidential and which are not: It can be difficult to know exactly what a business wants to remain confidential. An NDA can clearly define the aspects of the business that should not be shared.
Important Elements of a Legal Non-disclosure Agreement
In order for an NDA to be legally enforceable, it should include the following elements:
- The purpose of the NDA: An NDA should not only include the aspects of the business that should remain confidential but also why they need to be kept confidential.
- Length of the NDA: A specific time limit should be set on an NDA. In most cases, NDAs are set between four and five years, but this timeline can be extended for more confidential of information.
- Parties that can access the NDA: The NDA should also include information as to who can access the information in the NDA.
- Parties signing the NDA: The NDA should also include descriptive information on who is signing the contract.
- Defining confidentiality terms: The contract should also include specifics as to how the confidential information can and cannot be used.
If you suspect that confidential information has been shared despite having an NDA, it is best to consult with a lawyer. Begin collecting any evidence of the leaked information as soon as possible to support your case.
Information Covered Under an NDA
Fortunately, there are many different types of information that can be covered under a non-disclosure agreement:
- Processes: This includes things like unique manufacturing and engineering processes.
- Strategies: This includes marketing campaigns and launch announcements.
- Specifics of designs: This includes the blueprints or patent applications when a new design is created.
- Formulas: This includes the ingredients used to make up a product.
- Actual devices: This includes the objects or other physical devices used to manufacture a product.
- Software programs: This includes software programs not yet released to the public.
- Customer and client lists: This includes the clients or vendors used by a business.
There are also some types of information not eligible to be protected under a non-disclosure agreement:
- Prior knowledge: If the employee already had the knowledge before signing the contract.
- Public information: If the information is already known to the public, it cannot be included in an NDA.
- Third-party information: If the confidential information has already been released by a third-party.
- Legal release: If a court rules the information is released, it cannot then be covered under an NDA.
- Prior authorization: If it has already been authorized the person can release the information.
- Reverse engineering: If the information is easily identifiable by the public through reverse engineering processes.
NDAs can be a great option for protecting confidential information. However, they do have limitations, and it can be difficult to prove a breach of contract occurred.
If you need help with the definition of confidential information non-disclosure agreement, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.