Types of Information Protected (and Unprotected) By the Non-Disclosure Agreement in South Dakota
A confidential agreement in South Dakota (CA), often referred to as the non-disclosure agreement (NDA) refers to a legally binding document that creates a contractual relationship between two or more parties, ensuring that all the confidential information about your business is not disclosed to third parties, the public, the media, and competitors.
By signing an NDA, you establish a relationship between the parties that put down their names and signatures in the NDA. Doing this gives you confidence that the trade secrets or proprietary information shared is protected. Besides enhancing your potential or actual competitive advantage by ensuring that no one leaks your legitimate business interests to the wrong people, the NDA will ensure that the person or company that holds the rights to the confidential information does not suffer damages or losses as a result of the disclosure of the secrets.
The information protected by the contract could be proprietary information or a trade secret. And, a trade secret represents the information that gives a business an economic advantage over its competitors only if the information is not known to the public or competitors, hence the need for protection. Information that is regarded as a business interest will include processes, compilations, recipes, formulas, software, devices, programs or techniques.
Functions of the NDA
The NDA has three main roles:
Protection of sensitive information: by signing the document, the receiving party makes a pact not to share the information that is regarded as confidential to unauthorized groups or individuals. If the recipient of the information discloses the information without explicit and written directions from the disclosing party, then he or she will have breached the contract.
It ensures that inventors keep their patent rights: how many times have we heard complaints about someone stealing ideas from others, making a lot of money from the invention/ idea only for the rest of the world to learn that they are not the original inventors? Well, the main reason why this happens is that most inventors trust their friends or families and share their big secrets without ensuring that the persons with the knowledge will not use it for personal gain. To prevent more cases, you need to protect your inventions using NDA which assure you that you keep the patent rights to your inventions.
The contract will outline what is regarded as confidential information and what is not. For this reason, you must be explicit in the NDA, clearly outlining the details of the information you regard as confidential. Blanket descriptions are also unacceptable because they create loopholes. Precision ensures that the recipient does not feign ignorance in the event of unpermitted use or unpermitted disclosure.
Elements of the NDA
For enforcement, you have to start from scratch. You need to download a free South Dakota non-disclosure agreement form online the use it as a guide, ensuring that your NDA has all the information you need for its enforcement. Important clauses include:
Definition of the confidential information: as mentioned above, you need to outline the details of the confidential information in black and white. Vague descriptions mean loopholes and loopholes mean the disclosure of secrets to the world, consequently resulting in the loss of fair competitive advantage. You could also use this section to explain the reason why you are protecting that information. Basically, you are explaining why the information you are protecting is regarded as confidential information.
Obligations: primarily, the free non-disclosure agreement in South Dakota protects trade secrets from unpermitted disclosure. But, there's more to this document; once signed, it means that the recipient is not permitted to use the confidential information for their personal benefits without consent from the disclosing party. Also, the document obligates the recipient to restrict access to the confidential information with parties like consultants learning little about the confidential information, and only on the need-to-know basis. In some cases, third parties like consultants have to sign third-party non-disclosures.
Note that the recipient is also obligated to disclose the details of an NDA if compelled by the court or the government using a subpoena or any other compelling document.
Duration and geographical scope: this part of the NDA indicates how long the NDA stays in effect. In most cases, the NDA lasts for a maximum of 5 years although some details require indefinite protection.
Note that the parties to the NDA should sign and date it.
Designs and specifications, formulas, devices, business strategies/ methods, computer software, customer/ or vendor lists, and formulas.
Information not protected
Information accessible publicly
Information that the recipient is aware of before signing the NDA
Material and information obtained through reverse engineering
Information that must be disclosed as per the state laws
Information that the disclosing party authorizes the recipient to disclose
To ensure that your employees do not steal your customers or your trade secrets when they no longer work for you, create an employment contract that forbids competition, a non-compete. It has time and geographical restrictions, and it will be enforced if it's reasonable. By reasonable, the state requires that the NDA strikes a balance between the protection of the legitimate interests of the business against unfair competition and the protection of the employee's rights to work in the trained/ skilled field.
The state will only approve a non-compete if it's used to retain customers, protect legitimate trade secrets/ proprietary information, or when it's used to protect the investment of the employer in training the skills and experiences of the employee. There should also be a reasonable and valuable consideration from the contractual agreement - initial or continued employment.
Get started with our free non-disclosure agreement forms accessible in all cities in the state of South Dakota including Aberdeen, Pierre, Sioux Falls, Rapid City, Deadwood, Brookings, Spearfish, Mitchell, and Vermillion.