Everything You Need to Know About the Non-Disclosure Agreement in Pennsylvania
You've probably heard about confidential agreements or non-disclosure agreement countless times. With an increasing number of companies creating and using never-heard-off techniques to run their business and others coming up with mind-blowing innovations that mean a lot of money in the bank once the person has the ownership rights, it makes all the sense in the world to create and use a watertight confidentiality agreement in Pennsylvania.
You cannot chance sensitive information or unique techniques falling into the wrong hands - you may lose all you have been working for, and you will also lose your competitive advantage.
But, you should not jump on the first free Pennsylvania non-disclosure agreement form/ template you find online because the simple-looking NDA may not have all the information or clauses you need to make yours the most reasonable, yet restrictive NDA. You also need to make sure that you have the right kind of NDA.
Speaking of types, there are unilateral and bilateral/mutual NDAs. The unilateral NDA creates a contractual agreement that mutually ties the disclosing party to the receiving party, with the receiving party the party held liable for damages in the event of a breach.
On the other hand, the bilateral NDA creates a mutual relationship between two parties seeking to exchange confidential information. By signing the bilateral NDA, both parties promise not to disclose the trade secrets of the other.
Elements that make a complete NDA
For its enforcement in the court of law, your free non-disclosure form in Pennsylvania must have specific clauses or rather, it must meet some conditions. They include:
A precise definition of confidential information: indicating that the document protects confidential information is not enough. To protect your trade secrets and proprietary information well, you need to avoid blanket statements. That means that descriptions like customer lists and vendor information or marketing strategies hold a lot more weight in an NDA. You may want to indicate the reason why you regard the information confidential although you need not get into the details.
But, there's more - when defining what makes up the confidential information, you also need to outline the category of information that is not regarded confidential. In this case, the non-confidential information includes information already out in the public domain, information obtained from third parties, or information obtained by the receiving party independently; say through reverse engineering.
Obligations: this section of the NDA indicates what is expected of the receiving party. Among others, the receiving party should not disclose the confidential information or trade secrets to third parties, and he or she should not use the information they receive for their personal benefit. When interacting with third parties like investors, contractors, consultants, and other employees, the receiving party should restrict access to the information and only divulge the secrets protected by the NDA only if the third party signs a form of NDA created specifically for NDAs.
In this section, the disclosing party is also required to indicate how the information can be disclosed or exchanged. Note that no NDA is more powerful than a subpoena or any other formal and legal form of compulsion. And if the receiving party is compelled by the court or government to reveal the trade secrets protected by the NDA, the receiving party should oblige, although they must keep the disclosing party in the loop on all matters regarding the order and other related developments.
Timeframe: The disclosing party should indicate how long the receiving party will have to keep their mouth shut while still employed and also after they no longer work at the company. The NDA might cease being effective after an event or sometime after he or she leaves employment.
Effects of a breach: though this seems obvious, the consequences of a breach should be indicated in the NDA. In most cases, the breaching party has to pay monetary damages, or they might be served an injunction order by the court or both. The monetary damages depend on the losses suffered and or lost profits. This section may also have details of how the damages are calculated and recovered.
To make sure that the employer with knowledge of your trade secrets doesn't become greedy by stealing your secrets and sharing with your competitors, or even use the secrets provided to start their own companies to compete with yours, you might want to ask your employees to sign non-compete agreements.
This clause will prevent an ex-employee - disgruntled or not - from sharing or using your customer list/ information or selling trade secrets and other proprietary information to competitors. Also, the employee cannot work for your direct competitors within a specific area radius and specific duration.
For enforcement, the state has determined that the non-compete should protect the company's competitive advantage while ensuring that an employee's right to work within a specific field is protected. Also, the protected interest should be legitimate. But that is not all; the court will also consider the probability level of hardship the employee will face, as well as their skill set and level of training.
Lastly, there should be a reasonable consideration. That is; the value a person gets for accepting to meet the conditions of the non-compete. The courts accept an initial employment offer or benefits. But if an employee signs the agreement while working at the company, consideration amounts to a change in the employee's status in the form of additional compensation or promotion.
Looking for an NDA to protect your company's proprietary information? Perhaps you should try our free non-disclosure agreement forms available online and easily accessible from Philadelphia, Harrisburg, Pittsburgh, Erie, Lancaster, and Allentown, among other cities in the state of Pennsylvania.