Aside from money, innovation is likely the most important element that a business needs in order to grow. However, innovation does not always occur in a vacuum. Strategic partnerships are sometimes necessary to foster change; but before a partnership is formed, each party must know and understand the expectations of the relationship, including why both parties must keep things confidential as the innovation process moves along.
Because of that, businesses frequently use non-disclosure agreements when building a new relationship.
At their core, these agreements are contracts where each party promises to keep confidential any business secrets revealed during the course of the business relationship. A non-disclosure agreement is also essential in the event the relationship falters (or reaches an end) and one party decides to use the confidential information to their own gain outside of the relationship.
Further, if a non-disclosure agreement is used, an aggrieved party can seek an injunction to stop the offending party from using the confidential information and may seek monetary damages to compensate for any losses suffered (or any profit realized through unauthorized use).
Non-disclosure agreements are commonly used when trade secrets are disclosed during the course of a business relationship. Unlike patents, which are publicly known and are protected under federal law, trade secrets may not receive the same type of protection without a separate contract.
While non-disclosure agreements take many forms, they commonly have the same five elements. If you have questions about what should go into your agreement, a conversation with an experienced attorney will help.