Non-disclosure agreements (NDAs) are taking a hit in the media with the Harvey Weinstein harassment scandal. The movie executive is accused of using NDAs to keep his staff quiet about his personal behavior, which allegedly includes sexual assault and retaliation against women who refused his advances.
However, non-disclosure agreements are essential for businesses, especially high-tech companies and start-ups that need to protect their intellectual property.
Essential elements of non-disclosure agreements
Don’t settle for boilerplate language you may see in generic NDA forms. Instead, drill down on the specifics, and tailor your agreements to your business and the situation at hand.
- Defining confidential information: Carefully define what is covered by your NDA. Include existing intellectual property and IP that may be developed or disclosed during the period of employment or the contractual relationship.
- Defining what is not confidential: Defining what is not covered by your NDA is as important as defining what is. Be careful about defining your exclusions, as they may come back to bit you later on if they are too broad or narrow. For example, decide ahead of time who will own the concepts and ideas developed afterhours by your employee with the help of information gained on the job.
- Disclosure to third parties: While you want to curtail disclosure of your IP to others, some disclosure is often necessary. Your NDA should describe how the information can be shared. For example, identify the parameters of disclosure to potential investors by describing the purpose of the disclosure and establishing a time limit.
Definitions, disclosures and time limitations are just some of the essential elements of non-disclosure agreements. Don’t rely on self-help websites. Instead, educate yourself about the specifications used in your particular industry. You have too much to lose by making mistakes.