Non-Disclosure Agreement (NDA)

Signing an NDA means that they can’t go off and steal the idea. They can’t pinch your intellectual property. And they can’t disclose confidential information without breaching the agreement. It would give rise to a claim for damages for breach of contract and other remedies.

It also sends a clear message that this idea is important and confidential and must be kept that way. Just telling someone to keep something in confidence is not enough and can lead to he said / she said.

I know it’s uncomfortable asking someone to sign a document before you tell them your idea. But if you want to protect your Intellectual Property, it’s just got to be done.

The term of a Non-disclosure Agreement (NDA) depends on what is drafted in the agreement itself. It can state that the term is for a set period of time specified in the agreement or the term can be drafted to continue unless terminated by a party to the agreement.

Ideally, if you are the party disclosing confidential information, you should have the agreement to continue unless terminated by a party to ensure the recipient of the information is obligated to maintain confidentiality on an on-going basis as this provides more security that your confidential information will be protected for the longest period possible.

Whether you’re successful in enforcing your rights under an NDA in court proceedings will depend on a number of factors.

The first, is whether the agreement itself is valid. To ensure an NDA is valid it should be legally drafted and signed by the parties to the agreement. The agreement can’t be too broad in terms of the obligations it is imposing on a party. It’s important to be concise about what confidential information is being protected and how long the protections are in place because if a Court deems the agreement to be unclear on those points, it may be unenforceable. The agreement must also specify who cannot disclose the confidential information.

Once it’s confirmed your NDA is valid and enforceable, the next step is to prove there was a breach of the NDA, which amounted to an actual breach or anticipatory breach.

An actual breach is where you can demonstrate that a party to the NDA disclosed confidential information to a third party without the consent. An anticipatory breach is where a party to the NDA threatens to disclose confidential information and demonstrates a clear intent to breach the NDA.

Keep in mind that it can be quite difficult proving a breach of an NDA, especially if the unauthorised disclosure of confidential information was only verbally disclosed to a third party and there is no written record of the breach taking place.

One of the main benefits of an NDA is it acts as a deterrent for unauthorised disclosures from ever taking place in the first place, but if a breach of the agreement does take place it’s ideal if you have a written record or concrete proof of the breach if you’re considering taking the matter to Court.

There can be serious consequences if you breach your obligations under an NDA by leaking or disclosing confidential information or if another party to the agreement discloses your confidential information.

The unauthorised discloser may be subject to Court proceedings where an urgent injunction may be ordered against them to cease from making further disclosures of confidential information or they may be ordered to pay damages, which can be substantial.

An injunction is generally used where there is a threat of breach of the agreement, whereas damages are sought when the unauthorised disclosure has already taken place and the party affected can demonstrate that their business has suffered loss or damage, as a result of the other party leaking confidential information.