The Basics of Confidentiality Agreements

 Posted on December 15, 2015 in Confidentiality Agreements

If you are running a business and have a product or service that isn't offered elsewhere or is relatively unique, chances are you have considered a confidentially agreement. All businesses operating in an industry in which secret formulas or recipes could compromise the ability of the business to make a profit should have a confidentiality agreement in place with employees. It is best that this agreement is considered and signed before an employee begins work in earnest — any hesitation can lead to murky legal waters regarding the divulgence of company-specific products or services.

The reason that confidentiality agreements need to exist separation from patents or copyrights is because they, in large part, protect trade secrets. The difference between trade secrets and copyrighted products or processes is that a trade secret is considered intellectual property. Confidentiality agreements are implemented in addition to the protections afforded by copyright infringement laws, however, because trade secrets are intellectual property that is considered non-public. Laws regarding intellectual property are complicated to enforce and often confusing for both parties involved. Confidentiality agreements allow for some of this complication to be ironed out.

The importance of such agreements cannot be overstated. It is estimated that the theft of trade secrets costs the American economy billions of dollars annually. There are federal criminal laws, in large part monitored and enforced by the Federal Bureau of Investigation, to combat and punish such theft, but because of the wide scope of incident and the myriad of red tape that must be cut in order to prosecute such cases, these incidents are often best left to be handled by the parties involved. This is where confidentiality agreements come into play.

Confidentiality agreements can also be implemented as part of settlements between employees and employers. In this case, for example, a confidentiality agreement could be invoked to keep a disgruntled employee who was fired or who quit from sharing with former colleagues the details of his or her departure.

If you are interested in learning more about confidentiality agreements and if one is right for you, the most important step is to seek legal counsel. Do not go through it alone. Contact an experienced DuPage County business attorney today.

Sources:

https://www.washingtonpost.com/blogs/the-fix/post/confidentiality-agreements-how-do-they-work/2011/11/02/gIQAyNryfM_blog.html

http://www.businessinsider.com/protecting-our-trade-secrets-is-essential-for-the-economy-2014-8