Somewhat counterintuitively, not all ideas and concepts can be protected by “intellectual property” rights (such as copyright, designs etc.). Instead, such information may only be protected by keeping it confidential – but what happens if you wish to disclose that information to third parties?
Well, this is where non-disclosure agreements come into play.
It goes without saying that tangible, physical creations can be protected by registered or unregistered IP rights (for example, artistic works through copyright, inventions through patents, and brand names through registered trademarks. But what about ideas that may be bouncing around in your head which cannot be protected by traditional IP rights?
Although ideas alone are generally not capable of protection as a ‘work’ or an ‘invention’, information is nevertheless a valuable asset and can be protected to a significant extent through the use of non-disclosure agreements (NDA).
What is an NDA?
A non-disclosure agreement is a legal contract between two parties that outlines confidential material, knowledge or information that the parties want to share between one another, but wish to restrict access to by third parties.
NDA’s are particularly useful to businesses and individuals working in the intellectual property field, where discussing ideas with potential partners and negotiating business deals is a part of everyday life. As much as we may hope that conversations will be kept confidential, it is always better to prevent risk than to be left with no legal recourse in the event that someone decides to use and exploit those ideas without permission for their own benefit.
What does an NDA do?
An NDA can be widely drafted to include all sorts of information about a business’s products, including design ideas and concepts, brand and marketing ideas and strategies. This may also include financial information about the company which it wants to keep under wraps, such as market share information, proposed acquisitions, financial results, and the contacts of clients and suppliers.
The parties to a non-disclosure agreement generally undertake an obligation to keep the information secret and confidential, and not to use it or exploit it in any way except to the minimum extent necessary to fulfil an agreed purpose. In circumstances where the information needs to be discussed with other parties outside of the agreement, such as subsidiaries or employees, a typical NDA will be drafted to allow for disclosure provided that these individuals undertake the same obligations to ensure the information remains confidential.
This seems fairly simple. NDA’s can be widely drafted, and information can even be disclosed to individuals outside of the agreement in certain circumstances. But, should everyone consider using NDA’s?
A cautionary tale
Despite their mythical power, NDA’s should not be waved around at every opportunity. Bringing up the topic of signing an NDA during every meeting with a potential investor or business partner may have the effect of pushing them away. Although it is clearly a powerful tool that businesses and individuals can wield in order to protect themselves, it is always important to consider whether or not it is truly necessary in the circumstances.
When discussing ideas and concepts, be it in a business meeting or in a more informal setting while having lunch, it may be advisable to detail the commercial benefits of a product without revealing the technical features or functions in depth. In other words, it may be advisable to “hold-back” confidential information where possible. In this way, businesses and individuals can attract interest in their ideas without running disclosing confidential information at all.
If you require further information regarding NDAs or confidential information, please contact firstname.lastname@example.org to arrange a free consultation with one of our expert lawyers.
Guest post written by Hanna Nebiyu Vioque, Work Experience at Briffa