Does a non-disclosure agreement actually matter in protecting trade secrets?
A well and precisely drafted non-disclosure agreement provides protection. However, the following issues need to be considered in the agreement:
- The use of just any template is not recommended. A non-disclosure agreement should always be drafted appropriate for the purpose.
- What matters, in particular, is how the information to be kept secret is defined, what the scope of application of the agreement is, what the rights and obligations of the agreement parties are, and whether both the agreement parties disclose confidential information or only one - and, naturally, the validity period of the agreement.
- To make the agreement obligations more effective when critical information, in particular, is disclosed, a penalty clause could be considered. To obtain compensation based on a violation of an agreement, there is no need to show a damage, but a mere violation of the agreement is adequate grounds for compensation. The damages resulting from violations of non-disclosure agreements are usually indirect, that is, so-called consequential damages whose realisation may be difficult to prove.
- Despite a well-drafted agreement and a penalty clause agreed on, details on trade secrets or, for example, technology being developed should never be revealed to any greater extent than appropriate. Often, when discussing with potential cooperation partners, in particular, the temptation exists to tell everything about a new technology being developed, but discretion is well worth its while. In these situations, too, opportunity makes a thief.
- A non-disclosure agreement should be signed before confidential matters are discussed or disclosed for the first time.
- Do remember that an invention becoming public prevents its patenting.