All business owners are looking for ways to avoid business litigation and disputes. One that that is increasingly becoming popularized is a nondisclosure agreement.
Nondisclosure agreements, generally, refer to o contract where the parties agree to keep secrets, secret. In the employment context, these refer to a contract whereby the employee agrees to keep corporate confidentiality for anything learn during the employee’s employment or during business transactions. If the employee violates this by, for example, utilizing a trade secret for their own benefit, the employer can stop them through the court system and be compensated by enforcing the nondisclosure agreement.
Types of nondisclosure agreements
Nondisclosure agreements can be mutual, meaning that both parties agree to confidentiality, or one-sided (one-way or unilateral), which means that only the employee is bound to confidentiality. For example, a mutual nondisclosure agreement would be used with an inventor and company who they are in business with, so that neither is disclosing the invention to outside parties. More commonly though, they are one-sided to ensure that an employee does not disclose trade secrets.
Written versus verbal
A nondisclosure agreement should be in writing to ensure that enforceability is easy. Though, it can be created by an oral agreement, or even inferred. It can be inferred by looking at how the parties interacted to see if there was an inferred nondisclosure agreement. Though, oral and inferred nondisclosure agreements are extremely hard to prove, so most attorneys encourage their clients to make them explicit, through writing.
Trade secrets are the most utilized reason for nondisclosure agreements. This is because, unlike patents, nondisclosure agreements can keep trade secrets out of the public domain forever. And, trade secrets are only protected if the owner takes action to protect them, like through nondisclosure agreements. For our Maumee and greater Toledo metro area in northwest Ohio, a key takeaway is that nondisclosure agreements can be a key part in avoiding business disputes.