A non-disclosure agreement (NDA), also known as a confidentiality agreement, confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement, is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but to which they wish to restrict access by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets.
A non-disclosure agreement can protect any type of information that is not generally known.
Some common issues addressed in an NDA include:
- outlining the parties to the agreement
- the definition of what is confidential, i.e. the information to be held confidential. NDAs will typically include a laundry-list of types of items which are covered, including unpublished patent applications, know-how, financial information, verbal representations, customer lists, vendor lists, business practices/strategies, etc
- the disclosure period - information not disclosed during the disclosure period (e.g., one year after the date of the NDA) is not deemed confidential
- the exclusions from what must be kept confidential. Typically, the restrictions on the disclosure or use of the confidential data will be invalid if
- the recipient had prior knowledge of the materials
- the recipient gained subsequent knowledge of the materials from another source
- the materials are generally available to the public
- provisions restricting the transfer of data
- the term (in years) of the confidentiality, i.e. the time period of confidentiality
- the term (in years) the agreement is binding
- the obligations of the recipient regarding the confidential information, typically including some version of obligations
- to use the information only for agreed purposes
- to disclose it only to persons with a need to know the information for those purposes
- to use appropriate efforts (not less than reasonable efforts) to keep the information secure. Reasonable efforts is often defined as a
- standard of care relating to confidential information that is no less rigorous than that which the recipient uses to keep its own similar information secure
- to ensure that anyone to whom the information is disclosed further abides by obligations restricting use, restricting disclosure, and ensuring security at least as protective as the agreement
- types of permissible disclosure - such as those required by law or court order. Many NDAs require the receiving party to give the disclosing party prompt notice of any efforts to obtain such disclosure, and possibly to cooperate with any attempt by the disclosing party to seek judicial protection for the relevant confidential information).