In today’s knowledge-based economy, intellectual property (IP) has become an ever more valuable asset for businesses.
Protecting intangible assets is crucial to maintain a competitive edge in the marketplace.
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One effective tool for safeguarding your IP is Non-Disclosure Agreement (NDA).
Here, we’ll explain non-disclosure agreements and how to protect your confidential information.
Then, consider a partner like Wiser Market to track your IP online and provide you with online brand protection that works.
What is an NDA?
A non-disclosure agreement is a legal contract between two or more parties that outlines the confidential information they wish to share with each other while ensuring its protection from unauthorized disclosure or use.
By signing an NDA, the parties agree to keep the shared information confidential and restrict its use to the purposes stated in the agreement.
NDAs are also known as confidentiality agreements (CAs), confidential disclosure agreements (CDAs) or other names, but they are all generally aimed at making the entity who signed the NDA not discuss the information protected by the agreement with any non-authorized party.
NDAs often include a non-use clause to prevent the misuse of confidential and proprietary information.
For example, two companies who enter into discussions about doing business together sign an NDA.
Another example is a business that has a new product.
While still confidential, it needs a consultant to advise on a feature and wants the consultant to sign an NDA.
Another example may be a new app that can benefit from expert input on some aspects, but needs him to sign an NDA.
Signing a non-disclosure agreement prevents third parties from disclosing or stealing your new product or app information and creating an identical or similar one.
NDAs are very common. They are used during business development, R&D and future patents, as well as negotiations, collaborations, mergers and acquisitions, and as part of employment agreements.
What Can be Protected by an NDA
Here are some examples of information that can be covered by an NDA:
- Intellectual property: This includes patents, copyrights, trade secrets, technologies, and more.
- Processes and Methods: Manufacturing, chemical, and engineering processes.
- Business Strategies: Advertising strategies, marketing plans, and product launches.
- Designs: Drawings, blueprints, specification documents, products, inventions and patent applications.
- Physical Products: Things like products and prototypes – usually before they are in the public domain.
- Formulas: Formulas are trade secrets that can be protected in NDAs.
- Software: If the software code is not known, it can generally be protected by an NDA.
What are NDA Requirements
NDAs are contracts, and as such you can create a confidentiality agreement for your specific needs.
Yet, to make your NDA legally binding it needs to include the following:
- The parties to the agreement.
- The protected confidential information. Try to specify the information or describe the types of information with as much specificity as you can.
- Exclusions to the protection: NDAs include exclusions and limitations on what information is considered confidential.
- Allowed use of confidential information: Certain use is likely to contribute to your brand.
- Effective date and expiration.
- Consequences for breach of the agreement.
#WiserTip: Your NDA can require that the other party takes additional measures to keep your confidential information secret.
Benefits of NDA in IP Protection
- Safeguarding Confidentiality: The primary purpose of an NDA is to maintain the confidentiality of sensitive information like trade secrets. By signing an NDA, the parties establish a legal obligation to protect the disclosed information from unauthorized access, use, or disclosure. This helps businesses retain control over things that they deem important and allows them to act if someone breaches their trust.
- Helping Inventors Secure Patent Rights: When an invention is made public, it can be difficult to obtain patent rights. An NDA can help the inventor keep his invention a secret until he registers his rights.
- Preventing Exploitation: NDAs serve as a deterrent against exploitation or unauthorized use of intellectual property. When individuals or businesses know that they are bound by a legally enforceable agreement, they are less likely to exploit or disclose confidential information for competitive advantage.
- Establishing a Framework: NDAs provide a framework for the scope of confidentiality and the permitted uses of shared information. They reduce potential disputes regarding the disclosure and use of IP.
- Enabling Collaborations: NDAs facilitate collaborations by creating an environment that enhances trust. With NDAs, companies can exchange ideas and explore potential partnerships without the fear of losing their valuable IP.
- Legal Protection: If a party breaches the NDA, the affected party can pursue legal remedies to protect its intellectual property. NDAs often include provisions for injunctive relief, damages, or other remedies which can act as a deterrent against unauthorized disclosure or misuse.
NDAs When Manufacturing in China
Companies who want to sign a confidentiality agreement with their Chinese manufacturer usually sign a Non-disclosure, Non-use, and Non-circumvention Agreement (NNN).
This agreement is common when dealing with Chinese manufacturers.
Companies working in China often learn that a Western-style NDA is not the right choice for Chinese companies.
So why is an NDA not effective in China?
- NDAs focus on preventing the disclosure of confidential information, which may not be the key issue in China. The main risk with Chinese companies is usually them using your information to create a counterfeit or similar product and compete against you or allow another third party to do so.
- NDAs may not be enforceable in China. For an NNN agreement to be effective in China, it must comply with Chinese law, be enforceable in Chinese courts, and be written in Chinese.
What you need in China is an NNN agreement that prevents the other party from using any information you give to compete against you.
What is an NNN Agreement?
Non-disclosure, Non-use, and Non-circumvention Agreement. We’ll explain.
Non-disclosure: This is often less of a problem because the Chinese company is more likely not to disclose information but to use it for its own benefit. For this reason, it’s important to cover any disclosure inside the Chinese group or by anyone related to it.
Non-use: This means that the Chinese party (for example, a factory) agrees not to use your product or idea to compete with you. It’s a contractual obligation rather than the result of IP rights.
Companies should understand who they are working with. For example, Chinese companies often use subcontractors without considering non-disclosure issues. On the other hand, many companies may belong to a “group company” with multiple subsidiaries owned by a parent company, viewing all of them as parties to the agreement.
Non-Circumvention: This creates an obligation by the Chinese counterparty not to use similar products that can circumvent your product or company.
What does an NNN agreement include?
- The parties to the agreement
- Chinese law is the governing law
- Chinese courts are your jurisdiction (usually)
- Chinese as the official language (it often has advantages over a dual language agreement)
- Protection against other parties breaching your rights
- Specify damages that align with what is accepted in China
An agreement that is enforceable in China and has specific monetary damages can help deter Chinese companies from breaching the contract.
NDA and Trade Secrets
Trade secrets are protected without registration and can extend for an unlimited period unless disclosed to the public, acquired by others, or legally discovered.
It may seem easy to just get a trade secret, but there are conditions that must be met before the information is considered a trade secret.
Even with an NDA in place, sharing trade secrets can result in violations.
Therefore, companies should consult a professional and discuss signing an agreement that includes the protection of trade secrets.
NDA and Other Brand Protection
NDAs are tools to protect your confidential business information but, as mentioned above, they are not the only way to protect your brand. To do so, you need to protect your intellectual property.
Counterfeiters and other malicious actors can steal and infringe on your brand. Protecting your intellectual property starts with the registration and protection of trademarks, designs, images, content, patents, and so on.
For continuous monitoring and protection, you can use brand protection services.
Wiser Brand Protection
Enforcing an NDA, trade secrets, and other use of your IP on marketplaces, websites, social media, apps, and other digital channels is a challenging task.
Wiser Market’s proactive online brand protection strategy uses proprietary technology and machine learning to create an efficient and scalable brand protection solution.
We scan online channels and detect unauthorized use of your IP. After further analysis and approval, we move on to enforce your rights.
Advanced tech and expertise ensure the successful removal of online brand infringements so you gain control of your brand online and protect what’s yours.
Need to protect Your Brand?
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Why Sign an NDA?
Businesses typically use an NDA when they want to share information that is confidential.
Is NDA enough?
A non-disclosure agreement is one layer of protection, and brands should explore more protection strategies, such as trademark registration and online monitoring.
What are Examples of an NDA Breach?
Examples of NDA breaches include companies that work in partnership to manufacture a product protected by an NDA when the manufacturer moves on to produce and sell a competing product. Another example is when a company offers an employee a better position in its organization in return for providing trade secrets.
Can Everything Be Protected in an NDA?
Not all information can be fully protected by an NDA. For example, information that’s in the public domain cannot be protected, and the same goes for information that the other party already has access to prior to signing the NDA. Another example is information that has been disclosed on a non-confidential basis by a third party rather than by the disclosing party.
How to Deal with an NDA Breach?
NDAs are effective in deterring breaches, yet they cannot guarantee complete protection against unauthorized disclosure and misuse. In cases where violations occur, legal action may be required to deal with the leaked information.