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Legal Tips for Crafting Non-Disclosure Agreements

Business Productivity/Practices / Contractors and Employees / Intellectual Property / Legal Agreements / Setting Boundaries / Starting Your Business / Sticky Situations / Unexpected Business Risks

The employment landscape has changed over the last few years and many small and mid-size companies today operate with outside help – contractors or freelancers who perform important tasks but who are not full time employees on your payroll, or even third party companies who consult on a new product or service.

While companies that contract with these outside resources can gain access to top tier talent without having to increase headcount, there can be pitfalls to this approach in terms of properly protecting company secrets.  In many cases, non-disclosure agreements are the standard; here are some tips on crafting a smarter NDA:

Be sure you own what you want to protect.  Founders of new ventures need to go back and review any non-disclosure agreements they may have signed with former employers to ensure any ideas brought to the new company cannot be claimed by someone else in your employment past. 

Protect before sharing.  While it may be tempting to bounce a new idea off friends or colleagues outside the company, doing so can cause you to lose ownership of the idea if it is stolen before you’ve made a reasonable effort to protect it.  Having an NDA in place before you bring others into the fold can show this effort was made.

Be specific.  Your NDA should include a specific definition of the confidential information, the obligations of those signing it, any exclusions from confidential information, a specific time period that the NDA covers and other provisions like which state’s laws will govern the agreement and an attorney’s fee provision if the agreement is breached.

Get professional help.  While there are a number of NDA forms online, these boilerplate agreements will not necessarily provide the proper protections for your specific needs.  Consult with an attorney to draft standard NDAs for your company to cover employees, contractors and mutual relationships.

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