Non-Disclosure Agreement
[10]
i
Entrepreneurs should strongly consider having their employees sign Non-Disclosure
Agreements (“NDA”) to protect the employer’s confidential and commercially valuable
information and to retain ownership of intellectual property. More information on NDAs for
entrepreneurs can be found here: http://www.entrepreneur.com/article/228140.
ii
The employer must provide consideration for the employee’s obligations under this NDA.
This document assumes that the employee signs the agreement at the beginning of new
employment. If the employee is already employed at the time of signing the NDA, the
employer should research whether there is sufficient consideration under state law for this
agreement to be enforceable.
iii
The lists in these sections which describe the employer’s confidential information should
be modified to reflect the employer’s business and industry. The employer should also note
any relevant third parties with confidential information that the employee might access.
iv
Employers should explain why the protected information needs to be kept confidential
(e.g., because the information has commercial value to the employer and gives the employer
a competitive advantage).
v
An employer should customize the definition of confidential information according to the
nature of its business and industry and to be narrowly tailored to the employer’s business.
This will help to ensure that the agreement is enforceable. The employer may wish to specify
materials that are relevant to the employment, such as trade secrets, customer lists,
research, terms of agreements, software design, business practices, techniques, information,
potential transactions, financial information, and information about pricing, marketing,
advertising, sales, customers, personnel, etc.
vi
Here courts will look at: (1) What information the employee can access during the normal
course of business; and (2) Whether the employee is required to obtain authorization to
access any of the material in this section.
vii
An employer may grant the employee authorization to use or disclose confidential
information depending on: (1) The employer’s business organization and management
structure; (2) The nature of employee’s position and job responsibilities; or (3) The
importance of the particular confidential information at issue.
viii
An employer should ensure that the disclosure and use restrictions meet its legitimate
business needs, taking the definition of confidential information into account. Employers
seeking to preserve trade secrets may want to limit the disclosure of that information to a
specified group of individuals who need the information to perform their jobs.
ix
Time limits on the duration of a confidentiality agreement generally are not required for
enforceability.
x
Sections 3 and 4 are important to ensure that the employer retains ownership of its
intellectual property and that employees do not take that intellectual property and use it for
purposes not in the employer’s interest.
xi
Customize this section based on what applicable terms fall into the employee’s work
product.