Non-disclosure agreement
A non-disclosure agreement (NDA) or confidential disclosure agreement (CDA) is a legal contract between two parties which outlines confidential materials the parties wish to share with one another for certain purposes, but wish to restrict from generalized use.
NDAs are commonly signed when two companies or individuals are considering doing business together and need to understand the technology or processes used in one another's businesses solely for the purpose of evaluating the potential business relationship. NDAs can be 'mutual', meaning both parties are restricted in their use of the materials provided, or they can only restrict a single party.
It is also possible for an employee to sign an NDA or NDA-like agreement with a company at the time of hiring, in fact some employment agreements will include a clause restricting "confidential information" in general.
Other confidential information covered by NDAs include creative, but copyrighted, intellectual property, as in the case of a script for a high-profile film that is still in production.
Some common issues relating to the drafting of NDAs include:
- the definition of what is confidential. Modern NDAs will typically include a laundry-list of types of items which are covered, including unpublished patent applications, know how, schema, financial information, verbal representations, business strategies, etc.
- the exclusions from what must be kept confidential. Typically, the restrictions on use of the confidential data will be invalid if (a) the recipient had prior knowledge of the materials; (b) the recipient gained subsequent knowledge of the materials from another source; (c) the materials are generally available to the public; (d) the materials were obtained illegally; (e) the materials are subject to a subpoena. In any case, a subpoena would more likely than not override a contract of any sort.
- provisions restricting the transfer of data in violation of national security.
- the term (in years) of the confidentiality.
- the term (in years) the agreement is binding.
- permission to obtain ex-parte injunctive relief