Non-Disclosure Agreement / Confidentiality Agreement

Why an NDA?

People or companies with valuable information, inventions, and ideas may on occasion wish to share that information privately with other parties, in order to pursue funding opportunities, begin product development, hire employees, or develop a business relationship.  In such situations, the disclosing party wants to prevent the receiving party from:

(i) subsequently disclosing that information to third parties;

(ii) using it themselves for commercial purposes; or

(iii) analyzing, disassembling, or duplicating the information, if it is a working model or in other tangible form.

Furthermore, the receiving party should be placed under an obligation to take any security precautions (locked filing cabinets, password protected files, etc.) necessary to prevent unauthorized persons from accessing the discloser's confidential information which, at some point, may be in the receiving party's physical possession.

A contractual means to achieve these multiple goals is best achieved through a Non-Disclosure Agreement.  Technically, an NDA is more properly referred to as a Confidentiality Agreement, because non-disclosure to others is only the first of the above goals.  However, most people are comfortable using the labels interchangeably, and the term NDA is in more common usage.

Types of NDAs

Three kinds of NDAs exist, depending on the number of parties who are disclosing information:

• Unilateral = one party is a discloser, and one party is a recipient.  This type is best used for inventors and other persons with a good business or technological idea.  [Click here to see a brief excerpt.]

• Bilateral (or Mutual) = both parties have confidential information to share with the other, and so both in turn act as disclosers and recipients.  This is the most common type of NDA between businesses.  [Click here to see a brief excerpt.]

• Multilateral = three or more parties are entering into a relationship in which each may act as a discloser and/or recipient.  This type is occasionally seen in complex business or technology sharing arrangements.  A multilateral NDA is essentially a bilateral NDA with modifications to the language and grammar to accommodate multiple parties.

Components

A well-written NDA has several components, describing each in detail.  Some of these very important contractual provisions are often overlooked by generic NDAs and confidentiality agreements found on the internet, which usually have not been written by a contracts lawyer.  In contrast, our NDAs have been written from scratch by our top business contracts lawyer, based on his direct in-depth experience in writing and negotiating NDAs.

Our NDA contains the following components:

1. An explicit definition of what information is considered to be confidential under the NDA, and whether it needs to be labeled as such to be considered confidential by the other party.
2. An explicit definition of the business purpose for which the Confidential Information can be used.
3. Clarification of the ownership rights to the Confidential Information.
4. An explicit list of the various obligations, and exceptions to those obligations, in which the receiving party is to maintain confidentiality.
5. A description as to what the receiving party's obligations are if the discloser demands the return of the Confidential Information.
6. Remedies for breach, or threatened breach.
7. Various standard contract clauses regarding term, contract execution, etc.

Choice of Language

Bilateral and multilateral NDAs are generally neutral in language, and protect each party equally.

In contrast, good unilateral NDAs are subtlety biased in favor of the person handing out the NDA.  As such, there are two types of unilateral NDAs:

• Unilateral (Type I - Strict):  In this instance, the disclosing party provides the NDA.  This is the typical unilateral situation, and the NDA language should provide tremendous protection to the discloser, in ways that may not be detected by the recipient.  For example, the definition of Confidential Information is broadly drawn, the information is not required to be labeled "confidential" to fall within the protection of the contract, the recipient's ability to internally disseminate the information to their own employees is limited to a need-to-know basis, the term of the contract is long, and so forth.

• Unilateral (Type II - Loose):  In this instance, the receiving party provides the NDA.  This type of NDA is unusual, but is definitely appropriate for angel investors and other funding sources who regularly receive confidential information from laypersons.  The NDA language is much looser, and provides broad protection to the recipient, usually in a manner undetected by the discloser.  For example, confidential information is defined only generally, no remedies are mentioned, and the recipient's ability to disseminate the information to their own employees is generous.

Our Products and Services

We offer standard NDA templates that you can purchase online, as well as customized NDAs that we can write for you.  Our NDAs are regular Microsoft documents that, upon purchase, are made immediately available to you as a downloaded file.  You can then modify them as you see fit.  To purchase a standard template, click on a link below, and you will be directed to our online shopping cart.  We accept all major credit cards and PayPal.

If you would like us to write a customized NDA for you, please call us toll free at (877)-KUPPERLIN.  In a brief telephone interview, we'll discuss your situation and then have an attorney customize one for you.  We'll then e-mail it to you for your review and approval.  A customized NDA typically costs $85, although those for complex business deals (e.g., authorizing multiple layers of internal disclosure) usually cost more.

We also have packages available for download as a single ZIP file (containing two or four Word documents):

Protect your interests using an attorney-written NDA.  Click on the above, or call (877)-KUPPERLIN now!

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You may also be interested in our Non-Compete Agreements.