A non-disclosure agreement, or an “NDA,” also sometimes called a confidentiality agreement is a signed agreement between parties that protects valuable and confidential information, and are entered into to discourage theft or misuse of intellectual property. Such agreements are generally entered into to identify what is protected and who is bound to keep the information imparted confidential or non disclosed except as the agreement provides.
Such agreements identify the ideas, creations, trade secrets and anything else the creator wants to protect. Generally, it will usually specify a time frame for how long the non-disclosure protections are in place. In addition, the agreement will include rules against competition and solicitation. There will also be terms outlining the penalties or damages for violating the agreement.
An example of where an NDA may be required is a “venture pitch competition”. At these events, investors listen to pitches from entrants on various ideas and creations in exchange for funding, coaching, and networking opportunities. Participants share sensitive information with those who are evaluating the business idea. It’s important to ensure protections are in place so that this exposure doesn’t lead to commercial gain by someone other than the creator.
Another example is where a potential buyer of a company requests trade secret information in order to evaluate whether they should purchase the company and at what price.