A Non-Disclosure Agreement (also known as an NDA or confidentiality agreement) is meant to protect a startup or existing business from its employees misusing valuable proprietary information. Often it is a good idea to have a confidentiality agreement in place with each of your employees (regardless of position). For instance, your receptionist and salesperson might have access to your customer lists, which your company would deem confidential.
You should not use a “form” NDA that you download from the internet or obtained from another business. Your NDA should be customized for the facts and opportunity at hand and more importantly, for your particular business. It is important to keep in mind that your company’s confidentiality which is designed for the purpose of a “business-to-business” transaction (where both corporate parties disclose confidential information to each other) won’t suffice for the employer-employee relationship. You should consult a New York Business Lawyer (tech startup lawyer or corporate attorney) to prepare your company’s employee confidentiality agreement.
Your employee non-disclosure agreement should be specific as to what is considered “confidential information” and also include things that the employee ought to reasonably know are confidential. You should also include company trade secrets (see “When Do You Need a Nondisclosure Agreement (NDA)?” for more discussion about Trade Secrets).
Your corporate attorney (tech startup attorney or media lawyer) should set forth for what purposes the employee can use the confidential information and how he or she can use the confidential information (may not be removed from the offices, no reverse engineering, no copying, etc.). Of course, you need to have provisions specifying what the employee must do with the confidential information when his or her employment ends.
Your company lawyer needs to add “teeth” to the NDA by stating that the employee indemnifies the company for any breach and that the company may resort to any remedy at law or in equity to enforce its rights in the proprietary information (this means the employee could be sued for monetary damages as well as enjoined from using the information).
Of course, depending on what your business does, an employee confidentiality agreement may be part of a more encompassing agreement that includes provisions limiting the competitive activities of an employee when he or she leaves your company (sometimes referred to as a “non-compete agreement” or “forfeiture for competition agreement”) and requiring the employee to disclose prior inventions (and promise to either not include the prior invention in what they create for your company and/or grant your company a royalty free license to otherwise use the prior inventions).
Lastly, as with protecting trade secrets, it is not enough to merely have non-disclosure agreements (confidentiality agreements) in place — your company needs to implement policies and procedures to maintain the secrecy of your company’s confidential information.
For more information, click to watch the video, “When do I need an NDA” .
I recommend that you consult with a New York Business Lawyer to prepare your company’s employee confidentiality agreement, “non-compete agreement” or “forfeiture for competition agreement” to help ensure the best ways to protect your company’s confidential information and competitive edge.