Confidentiality Agreements

If you have worked in business, there is a likelihood that an employer has requested you sign a confidentiality agreement. Also referred to as a nondisclosure agreement, or NDA, this document is a legally binding contract wherein a person or business agrees and promises to treat particular information as a trade secret. The person or business also promises not to disclose those trade secrets to others, without proper and prior authorization. Because these types of agreements can be wrought with complexities, it is recommended to consult with an experienced Maryland confidentiality agreement attorney before committing to a confidentiality agreement.

Confidentiality Agreements Explained

Businesses typically maintain confidential information that is valuable to the enterprise. This valuable information may include a customer or vendor list, a specific manufacturing process, a formula for a product, or a sales plan, among other items of interest. These items are commonly referred to as “trade secrets.” Many businesses fear the risk of an employee taking a trade secret that is learned while on the job and leaving the company for a competitor or setting up shop themselves.

The most common manner in which a business tries to prevent its trade secrets from leaving their enterprise is requiring employees to sign a confidentiality or nondisclosure agreement. The agreement protects the information learned while the person was employed and gives the enterprise legal recourse against a breaching party.

Parts of a Confidentiality Agreement

The purpose of the agreement is to create a confidential and protected relationship between the parties. Confidentiality agreements are typically labeled as mutual, where both parties have provided trade secrets, or one-way, where only one party has done so. Trade secrets are not generally known information that gives a business a competitive advantage. The important parts, or elements, of a confidentiality or nondisclosure agreement include:

  • A defined term relating to the trade secrets or confidential information;
  • Exclusions from confidential information or trade secrets;
  • The obligations of the party receiving the confidential information or trade secrets;
  • The time period during which the confidential information or trade secrets must be kept private; and
  • Any other miscellaneous provisions that the parties want to address.

The Basics of a Confidentiality Agreement

Definitions: Confidentiality agreements will provide a list of the categories or types of confidential information that is intended to be protected by the contract. The purpose of providing this list is to establish the subject matter of the disclosure without disclosing the details of the trade secrets.

Exclusions: Confidentiality agreements also exclude some information from protection, imposing no obligation on the party that receives the information to protect it. The exclusions from confidentiality are based on established legal principles. Most importantly, that the information will not be protected if it was discovered or created by the receiving party independent of, or prior to, any involvement with the disclosing party.

Obligations: typically, the confidentiality agreement will state that the party receiving the information must hold and maintain it in confidence and limit his or her use of the information. Likewise, the receiving party may not breach the confidentiality agreement, induce others to breach, or induce others to acquire the information through improper means.

Time: a confidentiality agreement may require a receiving party to keep the information secret for a limited number of years. The most common time frame is five years, although many confidentiality agreements require secrecy for only two or three years.

Miscellaneous: there are several other issues that the parties may want to address in a confidentiality agreement such as choice of law, whether or not arbitration will be used in the event of a breach, and whether or not the prevailing party is entitled to attorneys’ fees.

Contact a Maryland Confidentiality Agreement Attorney Before Signing

It is important to not only read a confidentiality agreement in its entirety before signing, but also to have a knowledgeable attorney review the contract and explain your rights and obligations thoroughly. The Law Firm of J.W. Stafford, LLC has attorneys who are familiar with confidentiality agreements, and can advise you as to whether or not they are reasonable, valid or enforceable. Call (410) 514-6099 or contact us online to schedule an initial consultation with a Maryland confidentiality agreement attorney.

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