CENSIS white paper: Intellectual Property in Business

Intellectual Property in Business: IP basics, IP management, IP strategy
IP Basics for Start-ups (continued)
Confidentiality agreements
Confidentiality agreements (also known as nondisclosure
agreements or NDAs) are vital and critical
for maintaining the confidentiality of information
exchanged between parties. The request for an NDA
by no means signals a lack of trust in the other party.
On the contrary, it indicates an understanding of
professional conduct in business.
Never ask for an NDA before the first meeting. This is
important. You want to speak with as many people
as possible and you need to build a network of
connections. Requesting an NDA right after the initial
contact inquiry could damage the first impression: it
might be understood as amateurishness.
It is entirely normal to arrange the first meeting without
an NDA and to keep the discussion on a high level as
you get to know each other, understand each other’s
intentions and interests, and exchange only general and
non-sensitive information. Therefore, it is critical for
participating parties to prepare and define in advance,
firstly, the information that can be shared and, secondly,
when one party must indicate the need for an NDA in
order to continue the discussion. You should therefore
have two versions of your business slide deck: one
for sharing without an NDA, the other including
confidential information (to be shown only after an NDA
has been made).
An NDA should be signed in advance of entering an indepth
discussion, whether it relates to technical details,
business details or both – for example R&D projects,
commercial agreements, joint ventures, investment
transactions or employment relationships. NDAs apply
to all cases when involved parties receive or share
proprietary and sensitive information, and they cover
both oral and written communication.
Once an NDA has been signed, marking information
as confidential is a critical task. The confidentiality
of shared information must be communicated to the
receiving party, and if confidential information is shared
during a meeting, the sharing party must indicate this.
An oral exchange of confidential information is often
backed up with written documentation that must be
marked as ‘confidential’ (or with another label that
indicates the level of confidentiality).
It is worth considering developing a process that
captures the exchanges between the parties covered
by the agreement. Ideally, this should include minutes
of meetings showing who said what, as well as emails.
This is critical if one side decides to file a patent around
a confidential idea that was shared during a meeting by
another party (at times things can get dirty).
NDAs can be unilateral (one-way) or mutual. In the
unilateral scenario, only one party discloses confidential
information and the recipient is obliged to protect it.
In the mutual NDA scenario, the obligation works both
ways. Experience shows that mutual NDAs prevail in
business transactions as the communication between
the parties is rarely a one-way street. Mutual NDAs do
not oblige parties to reveal the same amount or type
of information, and in practice the level of information
sharing can be unequal. Even so, mutual agreements
are considered fair and convenient for open and
transparent business discussions.
Take-home message: You should record when,
to whom and what confidential information is
revealed under NDAs. You should also review your
confidential assets on a regular basis and assess how
much and which information remains ‘exclusive’
to your business. It is not uncommon for some
confidential information (including trade secrets)
to become widely known over time, as knowledge
is independently acquired and disseminated.
Confidential information may also circulate outside
your business as a result of unintentional or
deliberate leakage by employees, former employees
or contractors. Therefore, protective measures and
procedures are essential in this area. Confidential
agreements with external parties and new employees
are one such measure. (See also the section on IPrelevant
policies).
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