​Introduction to Non-Disclosure Agreements

​Introduction to Non-Disclosure Agreements

What is an NDA and how do they affect you?

By Emma Meakin

In a world where it’s all about having a competitive edge to get ahead, many companies request that employees sign a non-disclosure agreement (NDA).

What is an NDA?

An NDA is an agreement between various parties, normally in a commercial setting, such as at an advertising agency or a pharmaceutical research company. The terms seek to protect the work that is being carried out to maintain a company’s competitive edge. They usually exist to protect intellectual property rights, such as copyrights and trademarks. The NDA prohibits a person from publishing various and an unlimited number of things, for example the names of clients you’re working for, the formula of a new miracle drug or even the contents of a new book you’re writing for your company.

NDAs work both ways: not only do they protect the party requesting you sign the agreement, but they also look after you as a signatory by maintaining the business’ competitiveness and the long-term profitability of the company.

How do they work?

These terms create contractual obligations and are normally viewed by the law as a restrictive covenant. A properly drafted NDA seeks to protect only confidential information and should seek to restrict the ideas, design or copies being used for a specific purpose or reason.

They can also outline a period of time for which the information can’t be disclosed such as 3 or 5 years, or until the registration of the patent or trademark.

It needs to be noted that some rights aren’t infinite, such as trademarks and patents, so it’s best not to restrict their use under an NDA indefinitely. However, other information such as confidential terms of an agreement or a list of customers can be restricted for an indefinite period should you wish.

You need to be a realist when it comes to these terms and not seek to restrict too much information or for an excessive period. The NDA needs to be drafted to protect the work but also to allow people who realistically need to be informed of it and have access to it (e.g. lawyers, employees and advisors).

NDAs and your work

If you’ve invented a new idea or drafted an ingenious marketing campaign, initially the intellectual property rights lie with you. Therefore you may wish to protect this via an NDA. It’s commonplace to request that your investors or anyone you’re meeting with to discuss the idea of an NDA, but be warned, if you reveal information before they sign on that dotted line, you’ll find that the terms are null and void, and you won’t be protected. Always have the NDA signed prior to the revelation of your ideas.

But if the new drug formula or the logo were drafted in the course of your employment the intellectual property right will automatically lie with your employer and you can find yourself restricted by the terms of an NDA. It’s vital therefore that you read your employment contract carefully and seek legal advice if you are unsure of any of the terms.

Get legal advice

NDA’s are a common occurrence in the world of intellectual property and can offer both a shield from misuse and a weapon if the terms of the agreement are breached. But your conduct may render the terms void if you disclose the information prior to a signature. It’s key that you seek legal advice on any terms you wish to have drafted, or that you’re asked to sign if you’re unsure of anything.

More information on this topic can be located on the Government website.