Non-disclosure agreements (“NDAs”) are a crucial tool to protect the business interests of a company or individual in any marketplace, specifically in competitive or developing industries.
NDAs provide clear guidelines on how confidential information shared between parties can be used, by stating such information can only be accessed by appropriate people for a particular purpose.
Benefits of Non-disclosure Agreements
- Protecting specialist industry knowledge
NDAs can be used to keep skills and knowledge ringfenced within a business, which helps to give that business a competitive advantage. Protecting confidential information with an NDA can reduce the risk of valuable information, such as product intelligence and pricing, falling into the hands of competitors and minimising the risk of losing customers. - Enhancing collaborations
NDAs allow for collaboration between businesses and reduce the risk of sensitive information being leaked. Service providers within an industry will likely work with multiple competitors. An NDA with these service providers can limit the risk of confidential information being disclosed by that service provider to your competitors. - Safeguarding intellectual property
NDAs are primarily used to protect confidential information but can also be used to establish how respective intellectual property rights are utilised. It is advisable to have a formal agreement on intellectual property in place, however, an NDA can help to protect the parties’ intellectual property if such rights are accessed as part of initial discussions under an NDA and no formal agreement is yet in place. - Controlling personal data usage
As with intellectual property, an NDA can be used to place restrictions on the use of confidential information which includes personal data, by including provisions on the processing of personal data. - Ensuring recourse for disclosure breaches
NDAs can act as a deterrent to help prevent confidential information from being leaked, however, they cannot 100% guarantee that information will not be disclosed in breach of confidential obligations. What they can do is specify a remedy if there is a breach of confidentiality. As it is difficult to remove information from public knowledge once it has been leaked, the remedy will often be the right to go to court and obtain an injunction to stop the breaching party from continuing to share the information.
Implementing NDAs and additional protective measures
Having an NDA in place is a necessary step to mitigate the risk of confidential information being disclosed or leaked outside of a business to its detriment. As set out above, an NDA cannot guarantee the confidentiality of shared information, but it can act as a deterrent, and set parameters for the use of such confidential information. For that reason, it is advisable to also put in place additional processes and procedures to protect confidential information.
The best and most appropriate steps will depend on the business and its needs; this could be by way of password-protecting key documents or information, limiting disclosure to only those who need to know the information and/or encrypting the data you wish to protect.
In summary, there are a number of steps a business can take to protect its confidential information sand control the disclosure of such information, but entering into an NDA is certainly an advisable step when valuable business information is being shared with third parties.
The exact contents of an NDA will need to be considered on a case-by-case basis but having a template NDA that can be quickly used and tailored when required is something all businesses should consider having in place as one of its tools to protect its sensitive business information.
If you would like to discuss how to protect your confidential information or if you need our Commercial team to draft a standard NDA relevant to your business, please contact us.