importance of NDAs with customers

Patent Attorney

Don’t underestimate the value of this important document when doing business. An NDA is a legally enforceable document and is essential for businesses (both your company and customer) to maintain a competitive advantage. A unique idea or model is vital for any business to succeed. Therefore, it is critical to protect any confidential information. In order to safeguard business secrets and keep them from being disclosed by another party or the business’s employees.

NDAs are a must for what you create for your customer as well as for what your customer creates. If you are developing a new product, writing content, or otherwise developing something for sale, you may need to contract out or hire someone to help. Maybe it is a freelancer, a consultant, or the factory developing your prototype. You don’t want the person or company to steal your product or other information and sell it themselves.

Also, once you have an NDA written, it is very easy to plugin new names and companies. You typically only need to get an NDA written once, and you can use it over and over for new products and contractors.
NDAs protect sensitive information. By signing an NDA, participants promise to not divulge or release information shared with them by the other people involved. If the information is leaked, the injured person can claim breach of contract. The type of information covered by an NDA is virtually unlimited. In fact, any knowledge exchanged between those involved can be considered confidential. This may mean test results, customer lists, software, passwords, system specifications and other data. While this list isn't at all exclusive, it might help you think of other instances of protected information.

An NDA has the following advantages:

1. It emphasizes the importance of non-disclosure. The likelihood of trade secrets being divulged inadvertently by idle gossip or chance comments is minimized.

2.NDAs act as deterrents to any party who might consider deliberate disclosure. Such a person will understand that there will be consequences to their actions.

3.Should a violation occur, an NDA will be of advantage in a court of law during proceedings, and are the strongest (if not the only) safeguard for the affected party.

Generally, the content of an NDA includes basic clauses such as:

1.Who are the parties to the agreement?

2.What is confidential? i.e. the information to be held confidential.

3.For how long? The disclosure period – information should not be disclosed during the disclosure period, and the duration of the confidentiality agreement.

NDAs may be either unilateral or mutual. In cases of unilateral NDAs, one party discloses certain information to another party but needs to make sure that the other party does not take and use the disclosed information. In cases of mutual NDAs, both parties may be supplying information that is intended to remain confidential. This type of agreement is common when businesses are considering some kind of joint venture or collaboration.