Before sharing information

The best way to keep something confidential is not to disclose it in the first place. If you need to share information, you should use a non-disclosure agreement (NDA). This can happen when you talk to potential partners such as:

Investors
Manufacturers
Storekeepers

You may need to tell people about your idea or business to get advice. This could be from:

Accountants
Banks
Financial advisors
Insurance brokers
Business coaches
Marketing agencies

It’s important not to assume that conversations with advisors are automatically confidential.

A non-disclosure agreement is a legal contract. It sets out how you share information or ideas in confidence. Sometimes people call confidentiality agreements NDAs.

Your lawyer or intellectual property attorney can advise you on confidentiality and draw up a suitable NDA for you to use.

What to consider

You need to decide what your NDA covers. It can only protect information that is recorded in some form and marked “confidential.” It can also protect information you share in meetings or presentations.

A good NDA restricts the use of ideas and information to a specific, permissible purpose. This could be to evaluate your idea or discuss a joint project. Define this purpose in the NDA as precisely as possible. You can always expand the permissible purpose later. You won’t be able to narrow the restrictions on the use of your ideas or information later.

You need to be realistic. The person you’re talking to may need to share your information with others. This could be their employees or professional advisors. They may also need to copy your information for this purpose. Make sure that these disclosures to employees and professional advisors are kept confidential.

Think about how long the confidentiality should last. It’s common to see it limited to 3 or 5 years. After that time, they will be able to use and disclose your information. Once the information is made public, however, the NDA can no longer be enforced.

Some information can be kept confidential forever. Examples include:

Non-patentable technical know-how
Customer lists
Personal information about individuals involved in the project

Some companies or organisations may ask you to sign a document agreeing that they will not be bound to keep your ideas or information confidential. If so, you need to decide whether you are willing to risk disclosing your ideas to them.

Types of NDAs

NDAs can be unilateral, KB or reciprocal. Use a unilateral NDA only if you are disclosing information and a reciprocal NDA if both parties are.

If your NDA is only unilateral, you may need to execute it as an act to make it enforceable. This is easy to do, so don’t turn what should be a unilateral agreement into an artificial reciprocal agreement.

If you and the other party to the NDA are not in the same country, your NDA will need to specify the law governing the agreement. Remember that England and Wales has a different legal system to Scotland. It will also need to specify which courts it applies to. It is important that the courts of one country do not have exclusive jurisdiction. You may wish to enforce the NDA in a different country if unauthorised disclosures occur there.

Before your meeting

Do not disclose your ideas or information until the recipient has signed the NDA and returned it to you. Without an NDA, you run the risk that others will use your ideas or information without your permission.

Always check any NDA that another party asks you to sign. Make sure it does not unfairly restrict your future activities.

You can ask your potential partner or mentor if they have an NDA that you can use together. Read it carefully as it may serve their interests more than yours. If in doubt, take professional advice.

Make sure the right person signs the NDA. This could be:

A director of the beneficiary company
An officer of the beneficiary organization
A senior person with the authority to give the undertakings contained in the NDA
During your meeting

You should record what you disclose in meetings or in presentations. Ask people present to sign a hard copy of a presentation, or a technical drawing to prove they have seen it.

Record information you disclose in informal situations such as discussions or conversations. Note when and where this happened.

Non-disclosure agreements and public authorities

Public authorities, including universities, are required to make information publicly available if they receive certain types of requests:

Freedom of Information Act
Environmental Information Regulations

You should make sure your non-disclosure agreement (NDA) excludes these types of requests if you are speaking to a public body or university.

Further help

The Intellectual Property Justice Agency has launched a training and development service that is free for members. This will help you identify the practical and legal steps needed to keep your ideas and information confidential.