Knowledge is power. Sharing what you know might be essential for growing your business, but it’s best to keep that information under strict control. Protection can come from carefully drafted agreements, but it’s crucial to know how to apply them.
Trade secret theft alone costs up to $300 billion every year, but any type of intellectual property (IP) could suffer from unguarded information. Businesses that thrive on innovation need protections, and non-disclosure agreements (NDAs) could be the way to get them.
When to use NDAs
NDAs are contracts that set terms for how and when parties can use information. Secret methods, detailed processes and ongoing innovations can all fall under a comprehensive pact to keep your IP safe. Parties you should ask to sign an agreement include:
- Companies you’re forming business partnerships with
- Investors who need to understand processes before they commit
- New employees who will have access to sensitive information
Drafting an effective NDA is no simple task. The standards you set could depend on your leverage in the deal. While a potential employee may not be able to sway the conditions, another company that you trade information with may want to set rigid rules. Whatever approach you use for the NDA, you’ll need to specifically outline key points in the final deal, including:
- What IP will be included
- Who will have access to the information and the IP
- How you will deliver information
- What parties can do with that information
- When the agreement comes to an end
Changing circumstances can lead to a seemingly endless need for different forms of NDAs. But when knowledge can spur innovation, corner markets and put trade secrets in jeopardy, you want to be sure to protect that valuable IP and retain your power.