A non disclosure agreement is an agreement between two individuals or organizations restricting one individual from disclosing company business, proprietary processes or paperwork, or trade secrets, of the business.
The agreement, often called a confidentiality agreement, includes several types of closely held information:
- Information on the nature of and formulas for patents, copyrights, trademarks and service marks
- Information on company processes ("the way we do things here")
- Information on trade secrets- a formula, device, or mechanism, for example - that provides a competitive advantage to a company and which is severely compromised if disclosed.
Non-disclosure agreements are used in employment situations to restcit an employee from stealing company secrets, inventions, or proprietary processes.
They are also used when presenting business plans or applications in situations where the information may be stolen by the person receiving the application. For example, a person may present a patent application to an attorney, who might take the patent and use it for his/her own benefit. Or a business person might present a business plan for a unique new business to a venture capital firm, which might take that idea and use it without permission.
Having a confidentiality agreement does not prevent an idea from being stolen, but it does give the person who owns the idea the leverage to litigate to recover losses.
Non disclosure (confidentiality) agreements most often include a provision that the plaintiff may seek an injunction against the other party to prevent further damage.
