A company invests in various kinds of intellectual property to create their intellectual property assets. All kinds of assets need to be protected. The companies are also required to protect their intellectual property just like any other tangible asset. There is a certain amount of risk with the protection of intellectual property as a minimum amount of exposure of information is required for the protection of the same. The risk involves leakage of information and protection of intellectual property in a third party’s name. An agreement for the protection of confidential information of the intellectual property is one method of protection of intellectual property. An agreement signed for the protection of confidential information related to the intellectual property asset in question is known as the Non-disclosure Agreement.
The nature of the non-disclosure agreement is such that it protects the confidentiality of the intellectual property asset. The nondisclosure agreement allows the company to share the information of the intellectual property asset in hand without unduly compromising the confidentiality of the intangible asset. For instance, if a camera company A shares information regarding new patentable inventions with a client without signing a Non-disclosure agreement, then it is likely that the client B will get the information for his use and either get it published or use that information for creating the same IP asset or could even pass the information to a competitor for better financial gains. In such situations, the Non-Disclosure Agreement (hereinafter referred to as the NDA) is a legal contract between the parties that ensures that the disclosure of confidential information is limited for a specific purpose and for a specific period of time. The parties also agree to not disclose information shared with any other third party.
An NDA is signed usually when certain confidential information is shared with potential clients, investors, creditors, researchers, suppliers, etc. The signing up of an NDA grants more trust between the parties signing the NDA. It ensures that despite heavy negotiations, agreements, disagreements, the information needs to be protected at all times. It deters the theft, misuse, misrepresentation of intellectual property. The nature of the information to be shared, to be protected, the purpose for which it is shared, etc. will all be mentioned in the non-disclosure agreement signed between the parties.
Depending upon the nature of the intellectual property asset to be protected, there are certain non-disclosure agreements that will bind the parties to not disclose the information for an infinite period of time. Therefore it can be understood that the importance of NDA lies in the purpose of the creation of intellectual property itself. The non-signing of an NDA can lead to innumerable hassles for the parties involved. The NDA also mentions and highlights the penalties for the non-obligation of the NDA. Therefore, though it can be termed as a confidentiality agreement it is not limited to the protection of information alone, rather extends to the protection of interest of parties as well.