Search Site
Menu
The Nondisclosure Agreement: A Valuable Tool in the Protection of Intellectual Property and Confidential/Proprietary Information

When buying or selling a business, considering a joint venture, or even evaluating a vendor, supplier, or contractor, you should always be aware of the risks of disclosing and receiving intellectual property and other proprietary or confidential information, such as customer information, marketing strategies, pricing information, trade secrets, knowhow, and vendor/supplier information prior to the proposed transaction.  A nondisclosure agreement (an “NDA”) should be one of the first documents executed by the parties before any sharing of confidential and proprietary information or intellectual property.  A properly drafted NDA can serve to protect such exchanged information while both sides further evaluate the proposed transaction.

While even the best-drafted NDA cannot guarantee that confidential or proprietary information and intellectual property will not be improperly used or disseminated, it can serve as both a powerful deterrent to improper use of the information and, equally important, as a powerful tool should litigation ensue regarding the unauthorized use of the information.

One of the key components of an NDA involves clearly and thoroughly defining the confidential or proprietary information, and it should include any information that may have been provided prior to executing the NDA.  In defining the protected information, the disclosing party will typically seek a broader definition that would include any notes, analyses, or studies prepared by the receiving party or its agent using the protected information.  Typically, information that is in the public domain is not protected under the NDA.

Consistent with the adage that “less is often more,” an effective NDA should strictly limit the parties to whom the intellectual property and confidential information can be disclosed.  In most circumstances, the intellectual property and confidential information should be disclosed only to the executives of the receiving party and others, including any agents (e.g., attorneys, CPAs, financial advisors, etc. of the receiving party), on a “need to know” basis and only under the condition that any person receiving such information be bound to the same terms, conditions, and obligations as the receiving party.

In the case of highly sensitive intellectual property or other proprietary and confidential information, the disclosing party may consider limiting, controlling, and monitoring the release of the information.  This may be accomplished by providing one physical copy of the data and requiring that it be reviewed only under the direct supervision of the providing party, by strictly prohibiting the copying of the material, or by using an electronic means of disclosing and controlling the information.

One of the most important features of a well-drafted NDA is that it will serve to strictly limit the receiving party’s ability to use the information provided under the NDA.  In most cases, the intellectual property or confidential information provided may only be utilized to evaluate the proposed transaction and may not be used or disclosed for any other reason, whether for the receiving party’s gain or otherwise.  This is the critical and primary function of the NDA—to ensure that the receiving party does not use the information provided other than for the permitted purposes.

Eric R. Thiergood, Sr.

Phone: 281-367-1222

Fax: 281-210-1361

[email protected]

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact a Dedicated Texas Business Lawyer To Schedule a Consultation
Call 281-367-1222 or contact us online to schedule a meeting.

Strong In Action

  • Spring 2019

    The Strong Firm represents borrower in $42.3 million HUD construction loan for multifamily real estate development in Walton County, Florida.

    Read More
  • Spring 2019

    The Strong Firm acts as legal counsel for borrower in $32.1 million HUD construction loan for multifamily real estate development in Conroe, Texas.

    Read More
  • Spring 2019

    The Strong Firm aids borrower in $31.7 million HUD construction loan for multifamily real estate development in Nueces County, Texas.

    Read More
  • Spring 2019

    The Strong Firm represents borrower in the refinancing of a $3.57 million commercial mortgage-backed security for a commercial office facility in Montgomery County, Texas.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  • Peer Rated 2019 Award

Recent Blog Posts

Wait… Lawyers Do That?

Since the founding of the Strong Firm P.C. in 2004, we have prided ourselves on not only providing excellent legal services, but also playing a large role in our community. Every year I have the opportunity to speak to area students from first grade through college grad students on legal-related
Read More
Wait… Lawyers Do That?

Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

Texas law provides several options to transfer ownership of a deceased person’s (usually called a “decedent”) property. We previously discussed the difference between a dependent and an independent administration. The dependent and independent administrations are used when the deceased person’s estate exceeds some minimal thresholds for size or complexity, such
Read More
Part II – Probate: Identify the Most Efficient Probate Proceeding – Muniment of Title

But You are My Attorney, not My Dentist…

Preventive maintenance for your entity from a legal perspective   “An ounce of prevention is worth a pound of cure.” 'De Legibus' (c. 1240) by English Jurist Henry De Bracton   Potential Client:       “I have owned a limited liability company for several years. I haven’t had any issues, but someone is interested in investing
Read More
But You are My Attorney, not My Dentist…

Don’t Fall for This Chinese Trademark Scam

Don’t Fall for This Chinese Trademark Scam A trademark is any word, name or symbol used to identify and distinguish goods and services. For business owners, trademarks provide an easy way to build customer loyalty and communicate the quality and source of goods and services. Businesses often spend a great deal
Read More
Don’t Fall for This Chinese Trademark Scam
  • Video Vault


    Watch videos done by our legal team to gain a better understanding of your legal needs. Our lawyers give video insight into areas such as Real Estate, Business Law, Mergers & Acquisitions and much more.

Pay Retainer Online

Use our easy-to-use and secure online payment feature.
We accept all major credit cards.

Pay Your Retainer

Contact us

Quick Contact Form