Glossary and Definitions
Confidentiality Agreement (USA)
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A Confidentiality Agreement (or Non-Disclosure Agreement) is a legal document created between two parties that wish to share confidential information between them, while legally forbidding either party to disclose the information to any other person or entity. Types of confidential information that may be applicable are such things as inventions, trade secrets, new products or manufacturing processes, or any other trade secret items or data. The Agreement may be one-sided (designed to prevent one of the parties from disclosing the information) or mutual (whereby both parties cannot disclose any confidential information received from the other party).
Confidentiality Agreements are frequently used between companies that are considering doing business with each other and need to understand each other's processes or data to evaluate and create a business agreement. They are also used in employer-employee relationships, where employees need to have access to confidential information in the course of their employment, but the employer wants to ensure that the employee does not use or disclose this information for any other purpose. Occasionally, disclosure of the fact that a Non-Disclosure Agreement even exists is forbidden by the agreement.
These agreements perform several important functions:
- Defining exactly what information cannot be disclosed
- Protect sensitive information from being disclosed
- Prevent forfeiture of patent rights, which in some cases occur automatically once a public disclosure is made
Some common items included in a Confidentiality Agreement include:
- The complete names and contact information of the parties,
- A complete description of what information is confidential (this list is often long),
- Any cases in which restrictions on disclosure are not applicable (for example, if one party heard about the secret information already from a different source, or if the information or materials are generally available to the public),
- The duration of the confidentiality,
- Obligations regarding proper use of the information, and
- Circumstances where disclosure is permitted (e.g. to the police or in court).
To find out more about confidentiality agreements, or to draft a confidentiality contract, see below.
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