While operating a business, there are many instances in which a Massachusetts resident is likely to have to share an idea, a program, a formula or a blueprint with someone else. When sharing confidential information with another person or entity, it is vital to ensure the safety of the information and take steps to prevent the other party from using the information to the owner’s disadvantage.
One way the disclosing party can protect themselves is by entering into a non-disclosure agreement with the other party. This type of contract to protect a trade secret can also be called a confidentiality agreement. While it may seem like every transaction should be bound by such an agreement, the ones disclosing parties should focus on are those in which valuable information is being disclosed and the other party needs to be prevented from using or selling the idea without the disclosing party’s permission.
Some situations where entering into a non-disclosure agreement makes sense is when an invention is being shared with a potential investor, financial information is being shared with a potential buyer, new technology is being disclosed for a license and employees are being given access to proprietary information for their employment.
A mutual non disclosure agreement is one where each side is expected to share information with the other, whereas a one-sided one expects only one side will be sharing information. NDAs generally require identifying parties and definition of confidential information, in addition to other elements such as exclusions of confidential information. There are also other elements that must be included in a nondisclosure agreement and an experienced attorney can guide disclosing parties through the steps of ensuring their information remains protected.