Skip this step for now
Everything You Need to Know About a Non-Disclosure Agreement in Arizona
Every day, companies take on measures to ensure that the business’ confidential information does not fall into the wrong hands. These companies hire the best corporate attorneys but also institute measures which ensure that trade secrets are protected at any cost.
New and top-level employees are made to sign some documents not just to keep their mouths shut about the technologies or devices produced by the company, but they also sign legally binding documents which prevent them from breathing a word about planned mergers or takeovers.
Also, the same employees with knowledge of the company’s most sensitive information are required to sign the documents that forbid them from soliciting clients they brought into the firm, as well as other documents that forbid them from working for the competition for a specific duration.
In this article, we shall look at the details of all these documents as well as the conditions that make them reasonable and enforceable in the courts.
Confidentiality agreements (CA)/ Non-disclosure agreement (NDA)
The confidentiality agreement in Arizona represents the document which contractually binds at least two parties together so that they have to hold and maintain a business’ confidential information. By signing the contract, the parties promise to protect the trade secrets of an organization.
Confidential information ranges from documents or records like customer lists and marketing strategies to trade secrets which include technical procedures, prototypes and software programs, among others. One signed, the receiving party will be held liable for breach of contract with the harmed party seeking compensation or an injunction relief from the court for the damaged causes because of the release of the information to the public and/ competitors.
What is a trade secret?
A trade secret signifies the kind of information that is in the form of patterns, formula, a compilation, a program, device, technique, method or a process. The information must meet two conditions (1) the company must derive an actual or a potential independent economic value from keeping the information a secret or if the information is not readily ascertainable or obtained. (2) The information should be subject to the efforts considered reasonable under the legal circumstances created to maintain the secrecy of the information.
Misappropriation of the details of the NDA
A free non-disclosure agreement in Arizona is legally binding once the disclosing and the receiving parties sign off on it. However, in a situation where someone (other than the parties of the NDA) receives the details of the NDA through inappropriate means, then that is misappropriation.
You could also think of misappropriation as the acquisition of trade secrets of another person by someone with knowledge of the secrets or someone with the reason to know that the acquisition of the trade secrets was done improperly. Misappropriation could also be through the use or the disclosure of trade secrets of another person without the implied or the express consent of the secret keeper. The latter is true if the information was acquired improperly or knew that the information was acquired improperly.
To create an NDA, you need to download a free Arizona non-disclosure agreement form then enter the necessary details.
Identification: enter the details of the parties, as well as the date that the NDA is created. Besides the names of the parties, you may also add their titles.
Indicate the type of NDA you are creating. There are Unilateral and bilateral NDAs. The unilateral NDAs go one way, and the receiving party is the only party required to keep the trade secret a secret. The bilateral NDA, on the other hand, refers to a contract that binds both parties with either party laying out their trade secret which should be protected by the other party. The unilateral NDA is common in employee and independent contractor agreements, but the bilateral agreement is common in joint ventures, mergers, and takeovers.
Next up, it should be noted that the NDA creates a confidential relationship between the parties in the NDA.
Obligations: though this is part of the information in standard non-disclosure forms, you need to ensure that the NDA clarifies the fact that the parties are to maintain the highest and the strictest level of confidence at all times. The confidence should be directed to the parties’ employees, agents, affiliates, representatives, and other entities on the ‘need to know’ basis.
Under the obligations, it should also be noted that should the information regarded as confidential reach the competitors, become public or reach any other third parties, the responsible party will shoulder all the liability. It should also be noted that neither party shall copy, publish or use the information for their personal benefit without the written approval of the disclosing party. And, the receiving party will, upon a written request, return all the materials relating to the confidential information to the disclosing party within a specific duration.
Exclusions: this section highlights the information that is not regarded as confidential information or a trade secret. It includes the information available in the public domain, information obtained through genetic engineering, or the information found by the receiving party before signing the NDA.
Signatures: an NDA is incomplete/ invalid without signatures. So, at the end of the NDA, the parties involved in the execution of the NDA should sign and date the NDA.
This process applies to non-competes as well.
If you’d like to protect your trade secrets further by ensuring that an employee does not work for a direct competitor or to ensure that they do not start their own companies using your trade secrets, or to prevent the solicitation of clients, you might want to ask your high-value employee or the employees with access to your business’ sensitive information to sign non-competes.
But, there is a catch. Your need for an employee to sign a non-compete should be reasonable in the eyes of the law. For reasonableness, the courts consider whether the former employee has the ability to earn a living or not. They also consider the geographical scope and duration.
The state requires that the parties involved in a contractual relationship like the one dealing with non-competes get something of value from the arrangement. In an at-will employment relationship, an offer of initial employment is enough consideration. Benefits are also acceptable as consideration if the employee agrees to take the extra benefits in exchange of agreeing not to compete with their employer upon the termination of the employment relationship.
Often, nationwide restrictions for some professions are unreasonable as is a restriction against direct contact with a former client if the client had terminated business with the employer before the end of the employment relationship.
Would you like to prepare an NDA in Phoenix, Tuscon, Sedona, Scottsdale, Mesa, Gilbert, Tempe, Chandler or any other city in Arizona? Get started with our free and easily downloadable non-disclosure forms.