Making Non-Disclosure Agreements Enforceable

How do you increase the chances that you can successfully enforce your non-disclosure agreement (“NDA”) for your business?

Bear in mind that an NDA must concern confidential information related to the legitimate business interest of the company. What is the potential harm to the business should such information be exposed?

With that in mind, first, ensure that your NDA is as specific as possible. Tailor the scope of the information to be kept confidential. The narrower the better. Limit the NDA to trade secrets, client lists, specific knowledge developed by the business and kept confidential.

Be precise and spell out everything as clearly as possible. What questions could be raised about how the information is described in the NDA? Are there terms which could be construed more than one way? How clear are the definitions?

Avoid kitchen sink provisions. Have an exclusions clause. State what type of information is not subject to the NDA.

Second, build in a “reasonable” time frame for the information to be kept secret.

Third, consider the geographic scope of the NDA. Is the restriction as to the geographic use of the information reasonable?

Finally, like any contract, there must be consideration, i.e., a transfer of something of value. Both parties to the contract must stand to gain something by the NDA

To help evaluate all of these factors, research and consider what the common practices in your industry are.

Bear in mind that a court reviewing the NDA will weigh the benefit to the business of keeping this information secret against (i) the burden imposed in keeping such secret and (ii) the interest of the public. Courts will consider whether confidentiality of this information is necessary to protect the business from unfair competition.

Once you have the NDA in place, maintain confidentiality of the subject information at all times. Who in the company has access to this information? How is this access protected – passwords, secure location, keys, codes, etc. The more such access is restricted – to certain departments or higher-level employees, and by more security measures – the greater likelihood the NDA would be enforced. And restrict disclosures to third parties.

For further information on NDA’s or other issues affecting your business, please contact The Bachman Law Firm at 845-639-3210 or judith@thebachmanlawfirm.com.