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Guidelines for an Enforceable Non-Disclosure Agreement in New Jersey
What is a confidential Agreement?
A confidential agreement, also called a non-disclosure agreement refers to the legally binding document/ contract that is employed to protect private/ non-public information of business from third parties, public or other parties. It could also be used by parties that wish to keep that information safe for the sake of developing and protecting potential as well as actual business relationships.
The document outlines the details of the confidential materials, knowledge, and information regarded as private. The document is essential for the protection of business trade secrets.
Trade Secrets in Non-disclosure Agreements (NDAs)
Trade secrets refer to the sensitive business information that gives a company a competitive edge. It could also be defined as the information that includes formulas, techniques, patterns, processes, methods, compilations, or programs which are used by a company to derive actual or potential independent economic value when the information is not known by parties that could derive economic benefits from the information.
You might also think of a trade secret as the subject of the efforts deemed reasonable under circumstances which ensure that the information is protected.
You could, therefore, use an NDA for the protection of information like non-patented invention, sensitive marketing strategies, customer information/ lists, recipes, and business information among others. To be considered a trade secret by the courts, the information must be valuable, difficult for others to obtain the information or to duplicate, and the information should be unknown outside that business entity.
Also, the information could be known only by employees, and other people involved in the business, or the information could be subject to reasonable measures ensuring the maintenance of the secrecy of the said information.
Misappropriation of trade secrets
The state of New Jersey notes that misappropriation can happen in two ways. First, if the information is acquired through improper channels. Improper channels which could be used to obtain trade secrets include fraud, theft, trespass, breaking and entering, swindling or bribing, as well as any other measures employed to overcome the measures put in place to protect the secrecy of the information.
Note that reverse engineering or independent development is not improper means and they are covered under the ‘exclusions’ provisions of the confidentiality agreement in New Jersey.
The second way of committing misappropriation is through publishing private information knowing that the information was acquired improperly or under the circumstance that gives rise to a duty that limits the use of the information or the maintenance of secrecy.
You may want a little guidance from your attorneys but, NDAs a free. But, to create that free non-disclosure agreement in New Jersey, there are conditions you should meet. The conditions include:
Downloading a non-disclosure form the populating it.
Entering the elements of the NDA
The elements include definitions, obligation, exclusions, time periods, and signatures/ dates.
Definition: the definition covers what the NDA entails. It could be the general information about the trade secret or specific details of the confidential information. The type or category of information will establish the rules of the contract created when the disclosing and the receiving parties sign the NDA.
Exclusions: this has the information that the receiving party knows by the time they sign the NDA because the information is available publicly, because he or she got the information by researching before signing or if they obtained the information through reverse engineering or independent development.
Obligations: this provision of the NDA indicates what is expected of the receiving party, as well as the consequences of a breach of contract or the misappropriation of the trade secrets. Under the obligations, the receiving party cannot publish, copy or reveal the details of the trade secret for their own benefits.
Time Period: this section of the free New Jersey non-disclosure form indicates how long the receiving party will be required to keep the information confidential, or the fact that the information will no longer be regarded confidential after a certain time or event.
It should have dated signatures of the disclosing and the receiving parties.
Other essential clauses include then ones that cover severability, waivers, integration, and relationships.
After all those months of intensive and expensive training, wouldn’t you wish for the employees to work and employ the knowledge gained within the firm? At the same time, you might want to make sure that they do not trade business secrets with third parties or even start their own companies a month after learning and working with you, right?
Well, to prevent any of these frustrating events from taking place, you could protect yourself by making it necessary for your employees to sign non-competes. These documents are more restrictive the NDA and they protect you from losing your competitive advantage.
When signed, it means that the employee has agreed not to share confidential information about your business for a specific duration or not to work for direct competitors.
As long as you draft this document correctly, it will protect your company should a former employee disclose trade secrets unknowingly or unwittingly.
For enforcement, the NDA and non-compete agreement must meet the following guidelines, besides having all the elements above.
Should be reasonable in the wording and the intent – the document is not reasonable if it’s to remain in effect for all eternity or for an unreasonably long time. Also, it cannot cover a wide geographical area such that it prevents an employee from getting a job in the field they are passionate about within a place that they can commute from their home. So, the NDA must be within the reasonable limits in time and geography.
It should make business sense – you should not ask an employee to sign an NDA or a non-compete just to keep their jobs. The signing of the document should take place only because of the employee’s position in the company, knowledge gained/to be gained, or information which, once shared, could hurt the company.
Consequences/ Remedies for breach of contract or misappropriation
Injunction relief: the court could order the receiving party in breach of contract from publishing your company’s trade secrets to defend your rights.
Damages: the court could order the defendant to pay money damages to you (the plaintiff) for the value of the economic harm suffered as a result of the violation of the agreement.
Are you planning to use NDAs in your company located in Jersey City, Newark, Atlantic City, Trenton, Wildwood, Princeton, Paterson, Cherry Hill or any other city in New Jersey? Download our free non-disclosure forms today.