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Protecting trade secrets with nondisclosure agreements

When you own or operate your own business, your trade secrets and intellectual property are likely among your most valuable assets. Therefore, keeping this information under wraps should be of particular importance to you. One way you can effectively protect trade secrets and intellectual property is to have your employees sign nondisclosure agreements once they sign on to work for you.

A nondisclosure agreement, in its simplest terms, is a legally binding contract that prevents your employees from discussing certain elements of your business you want to protect. Once you and your employee sign the NDA, the two of you enter into a confidential relationship that prevents your employee from speaking about whatever information your agreement covers inside. So, how can you go about crafting an effective NDA, and what type of information should you include therein?

Drafting the NDA

While you want to take a comprehensive approach when drafting your NDA, you also want to be careful to keep it simple and brief enough for everyone to understand. As you may imagine, one of the first things you will want to cover in your NDA is to whom it applies. Then, you want to clearly define exactly what information you consider confidential, and this can include anything from written communications to oral ones.

Once you nail down what information you consider confidential, you will want to add language pertaining to the terms of the NDA. You may, for example, specify that the NDA will apply for a period of, say, 18 months, at which point you may need to revisit or update its terms.

Another important element of a strong NDA is a section that outlines what happens if your employee fails to protect the information outlined within it. You may, for example, include language that dictates what you plan to do if your employee breaches the contract and shares the information you seek to protect.

Drafting a strong NDA takes some careful consideration. While you want to protect yourself, you also do not want to scare your employee or make him or her hesitant to sign a document he or she may see as overly restrictive.

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  1. Charles W. Dobbins, Jr.

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