1. An overview
Sharing new information and original work that you want to sell needs a lot of trust between people. The Indian law of secrecy protects the right not to share private information that was gained in private situations.
This guide talks about non-disclosure agreements (NDAs), what they mean, and the main terms that make them up. The guide also talks about things you should think about when making an NDA and signing it.
2. What does a non-disclosure deal mean?
Some people also call this a secrecy agreement. An NDA is a cheap way to keep your business's ideas safe.
An NDA is a letter of intent that you and the other person must follow. Most of the time, you agree to give them information for a certain reason, and they agree not to share that information with anyone else. It lets you share your trade secrets with business partners without them being able to tell anyone else.
For instance, you might have an idea for a product and need to find out from a maker how much it will cost to make. With an NDA, you can be sure that your partner won't tell a rival about your idea.
These deals can also be used with your workers and reporters who you want to send financial, technical, or new product information to before they get it out to the public.
Trade secrets, like a formula, system, or process; technical drawings and designs; chemistry and mathematical formulas; business plans; and lists of customers and potential customers are all things that NDAs can protect.
When someone else doesn't know about something, it's a trade secret or private. The only time it's worth anything is when it stays secret.
Give NDAs between you and public groups a lot of thought. In line with the Freedom of Information (India) Act, any information you give could be made public. This means that everyone has the right to see information that the government has.
Know ahead of time what you want to say to possible business partners, and don't change it. This lowers the chance of privacy being broken.
3. Different kinds of non-disclosure agreements
You can make non-disclosure agreements (NDAs) that fit your needs.
They can be used to:
• give and receive intellectual property
• share business or trade information
• make a relationship official, like between a boss and an employee
NDAs for staff members
Most breaches of secrecy are caused by current and past workers. Your employees have a duty to keep trade secrets safe and not use them in a way that hurts your business. It's best to get this in writing, though, and be clear with the employee about what is private. You should also make sure that the NDA covers what happens when the worker leaves your company.
Other Kinds of NDAs:
• A precedent secrecy agreement is used when two companies join or buy each other. A company that wants to buy your business will check out your books and know what you own. If the potential buyer backs out of the deal, an NDA can help protect your trade secrets and private information.
• You can still use an NDA even if you don't know exactly what information you will need to share during a business relationship. For the NDA to still apply, it is smart to mark as private any information that will be shared later.
One-way and two-way NDAs:
• A one-way NDA is used when one business shares information with another and both agree to keep it secret.
• A two-way NDA is used when two businesses share private information and want to make sure that neither will tell the other their trade secrets.
4. Making a deal not to reveal information
When you sign a non-disclosure agreement (NDA), it's a good idea to say:
• how the information can be used
• any limits on how the information can be used, like not letting the person make copies
• that the owner still has the rights to the intellectual property, copyright, or patents
The important parts will be the ones that say:
• no one can copy or keep private information;
• no one can share information that isn't already in the public domain;
• there will be a way to fix any problems, like paying money if the agreement is broken;
You should make sure that the information you want to keep private can't be seen as public. Your product or idea is no longer private once you show it to someone, talk about it, or write about it.
If you want to know if a public body has an NDA that follows the rules of the Act, you should ask them. For more information on this subject, please read this advice from the Indian government.
There are ready-made non-disclosure agreement (NDA) forms that you can buy and change to fit your needs. This doesn't cost much, and the template can be used again.
If there are problems with an NDA, like vague meanings, it won't protect you or your business enough. For extra safety, you might want to ask a lawyer to make a custom secrecy deal for you.
If you don't want to get sued for loss of secrecy, you should keep your private information safe. The courts would not want to keep secret information that you have not taken steps to keep safe.
Some steps that could be taken are: keeping private data locked up; limiting who can see it; making sure that your IT security systems are always up to date;
Having a business strategy about how to use and share private information is also helpful.
5. Important parts of a non-disclosure deal
In non-disclosure agreements, you will see these terms and what they mean. It is helpful to know what they mean:
Confidentiality is a law principle that makes sure people keep things secret from each other.
Owner or discloser: The name of the person, group, or company that is giving out the information.
Recipient: The name of the person, group, or company that will receive the information and is in charge of keeping it secret.
A statement of reasons is a short line that explains why the parties want to make the information the subject of a contract and what the information will be used for.
Subject: The papers and information that the secrecy deal will cover.
A penalty clause is an alternative way to set the amount of money the owner or discloser will get back if the user breaks the deal.
Confidentiality clause: This is an extra clause that says both sides must not tell anyone about the confidentiality agreement.
Term of agreement: How long the parties have to stay in agreement.
6. Things to think about before signing a non-disclosure deal
You are legally bound to follow through on a non-disclosure agreement (NDA) once you sign it. This lets you share your thoughts with business partners without them being able to tell anyone else.
The contract is only as strong as the person who signs it, which is a shame. You can sue your partner for losses in court if they break the contract, but it could be expensive and take a long time. Also, it can be hard to put a number on the losses.
You can get a stay, which is a court order that stops them from breaking the deal, if you think that your business partner is about to break the NDA.
Make sure that all of the agreement's definitions and circumstances meet your needs. This will help you if you have to go to court. Also, they should be right for the trade secret you are giving out.
Making it to the "patent pending" stage of a patent application is a good idea before going to marketing, licensing, or funders. Read our book how intellectual property works: the basics to learn more about patents and intellectual property.
The most difficult part is figuring out exactly what the deal covers and doesn't cover. The person who is giving the information wants the contract to be interpreted in the biggest way possible, but the partner would rather have it understood in a more limited way.
It is possible to change or add terms to settle any problems that either party is worried about.
You can talk to someone at ProMunim of India about how to keep your work and information safe. Please call 1800 266 1294.