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Use of Nondisclosure Agreements to Protect Your Company

Pennsylvania business attorneys are well-versed in drafting enforceable contracts.Nondisclosure agreements, also referred to as NDAs, are a common legal instrument used by companies to protect sensitive company information. NDAs can be used to protect customer lists, patents, trade secrets and other information that gives a company a competitive advantage.

An NDA protects a company from unauthorized disclosure of its confidential information. Through an NDA, a business can ensure that, whatever information that it shares with others that gives it a competitive advantage, is not shared with competitors. In case the agreement is violated, the business will then have recourse and can seek damages.

When to Use an NDA

Employees – Employees need to have access to a company’s sensitive information to perform their jobs. However, in order to protect the employee from sharing this information with the company’s competitors, businesses should use nondisclosure agreements. An NDA can prevent the employee from taking the information accessed through the job to competitors or use it for its own gain.

Proprietary Information – When a company has proprietary information such as a trade secret, financial information or other sensitive information it should be protected from unauthorized use. An NDA will inform the other party of the confidential nature of the agreement so that the information is not shared with others.

Product Details – When a company is seeking investment from investors or considering licensing with another company to expand its business, it is important to have the other party sign an NDA. An NDA will ensure that the other party knows that the information being shared is proprietary and that it cannot take this information and use it to develop its own product.

Drafting an NDA

A nondisclosure agreement should be drafted such that it protects the company’s assets. An NDA should be clear and provide disincentives for violating it. Therefore, when drafting an NDA, it is important to clearly define the information that is sought to be protected. The terms of the agreement should clearly define the information. If the terms are too broad, the agreement may not be enforceable. It is advisable to clearly define the confidential information.

The agreement should also clearly specify the parties to the agreement as well as the duration of the agreement. Finally, the NDA should create a disincentive for its violation. Usually, a term regarding prevailing party is entitled to attorneys’ fees creates the necessary disincentive. If the party violates the agreement and loses its case, it will not only be liable for damages but also attorneys’ fees.

Every business should utilize a reliable NDA that it can use with employees, investors and potential partners. Drafting an NDA requires diligence, strategy and clarity.

The Pennsylvania business attorneys at MacMain, Connell & Leinhauser are well-versed in drafting enforceable contracts and can assist your business in developing a strategy and ensuring that your business protects its proprietary information through a strong nondisclosure agreement. For assistance in drafting an NDA, contact us online or at 484-318-7106. Our office is located in West Chester, Pennsylvania. We serve clients throughout Chester County, Philadelphia and Pennsylvania.