• Nondisclosure Agreements for Technology Companies
  • June 10, 2016 | Author: James H. Gulseth
  • Law Firm: JGPC Business & Corporate Law - Pleasanton Office
  • Nondisclosure Agreements and Technology Companies

    While intellectual property laws present a significant amount of protection to individuals and companies, some “creations” are not capable of being protected through patents, copyrights, and/or trademarks. This is why many companies (especially companies on the cutting edge of technological developments) will have their employees sign nondisclosure agreements. These agreements essentially prohibit the employee from taking trade secrets and other confidential information revealed to them by the company and disclosing this information to competitors or others.

    The Purpose of Nondisclosure Agreements

    Technology appears to be progressing at breakneck speed and has been for some time. When one considers that, in the span of approximately 200 years or so, humanity has gone from the first car powered by an internal combustion engine (albeit one fueled by hydrogen) to driverless cars and vehicles powered by clean, renewable sources, one cannot help but be amazed at the pace of human achievement. Central to the development of new technology is the ability of a company to keep its trade secrets … well, secret.

    Problems with Nondisclosure Agreements

    It is simply not enough for most technology companies to simply have their employees sign an agreement that says the employee will not disclose secrets. Such a vague nondisclosure agreement is unlikely to be enforceable and leaves the company – and its ideas – at risk. Instead, the nondisclosure agreement should:

    • Identify what is considered “confidential information.” Before an employee can keep confidential information secret, the employee must know . A company is not able to simply claim any information it shares with its employees to be confidential. Instead, the nondisclosure agreement should describe confidential information with some particularity – trade secrets, ideas that have not yet been patented, and/or information about the workings of the business, for example.
    • Detail what can – and cannot – be done with the information. When an employee receives confidential information, what can he or she do with it? Can he or she share the information with a coworker or supervisor? Can he or she copy a blueprint to share with others within the company? Under what circumstances should the information be returned to the employer? These considerations should be addressed in a nondisclosure agreement.

    Finally, a nondisclosure agreement should be paired with company policies and practices that are designed to restrict the dissemination of confidential information. It is difficult to claim certain information is meant to be secret when the company makes no effort to actually keep the information secret.


    This article was originally published on JGPC.com.