5 Non-Disclosure Agreement Negotiating Tips
In this era of online and mobile accessibility, sharing information has become something that is difficult to police. Just look at WikiLeaks and their seemingly endless supply of classified government documents. And if the government can’t even stop their most protected information from being shared, what chance do businesses have of keeping their secrets secure? Well, there is one option: the non-disclosure agreement, or NDA. Unfortunately, this agreement won’t necessarily stop rogue employees, business partners, or vendors from leaking your information if they want to. But when done right, they will certainly give you options for legal recourse, including recovery of documents and the imposition of fines and possibly even criminal charges against the person or persons that have breached the NDA, harming your business in the process. Here are a few basic negotiating tips that will help to ensure your non-disclosure agreement meets your needs.
- Specify use. When you share privileged information with employees, clients, vendors, partners, and so on, you need to make sure your NDA spells out the terms of usage. For example, employees may use their knowledge in the pursuit of their professional duties, but you might prohibit them from sharing sensitive company data outside the office setting for any reason (not with family or friends and certainly not with competitors or the press). And business partners may only be allowed to use propriety information in the capacity of your intended partnership, and they could be called upon to keep this data confidential and return it (and any copies) after a set period of time.
- Set a time frame. An NDA can generally only last so long, and you will have to specify how long when you create the contract. You might not want employees jumping ship, heading to competitors, and sharing your trade secrets. So the NDAs they sign might include specifications for how long they must wait to share such information with new employers (1-3 years is fairly common). You might also include provisions like non-compete clauses, but this may cause prospective employees to balk when it comes to signing.
- List exceptions. There are nearly always exceptions to standard NDAs, and these need to be stated specifically. For example, you may not hold partners to an NDA if the information in question becomes public by another means.
- Specify recourse. You need to make your intentions clear when it comes to repercussions associated with breaching the NDA. This could include fines, injunctions, or other types of recourse, but it might help your cause if the people signing your NDA are well aware of potential penalties for breach of contract.
- Understand local laws. Whether you’re dealing with New York, Idaho, or Texas non-disclosure laws, it’s important that you know the legal parameters outlined by your state for such documents. For example, you may want your non-disclosure agreement to have an indefinite time frame. And if you’re able to cite trade secrets within your NDA, chances are that you can enforce this to a degree since competitors could use this crucial information to copy a product and steal your market share. However, if the information in question is not considered a trade secret, you may be restricted to, say, a 3-year time limit for enforceable non-disclosure. You can certainly try to extend it, but other parties may refuse to sign, and a court might not uphold it if state laws differ.