Beware sharing trade secrets under Non Disclosure Agreements (NDA)

Trade Secrets are one of the most critical forms of intellectual property for many businesses. Distinct from patents, which require a business to publish its technology and have limited possibility potential, managing technology as a trade secret can allow a business to maintain competitive advantage of potentially unlimited basis.

However, all too often companies sacrifice their secrets because they misunderstanding the effect of a non-disclosure agreement.

Non disclosure agreements tend to have a term of between two and five years. According to most standard templates at the end of that term the parties are free to use the others confidential information however they like. That is, obligations of confidentiality come to an end.

This is all well and good for confidential information that is primarily commercial in nature, and has a limited life span in terms of relevance and sensitivity. However, for trade secrets, the company will often have a desire to manage technical information as a trade secret for many years beyond the end of the term of an NDA.

With this in mind, best practice tends to involve sharing trade secrets independently of a standard non-disclosure agreement, for example via a specific agreement for the sharing of a particular trade secret, with defined terms around who within a recipient organisation will access the trade secret, how, and with what restrictions. This would be consistent with the trade secret owners policies defined for the management of the trade secret in question.

Our advice for clients is to at all times maintain a comprehensive trade secret register, including policies for sharing each trade secret both internally within the company, and externally of the company. Adhering to such policies goes a long way in keeping your secrets safe and secure in the long-term.

Send us a note if you want to discuss your IP or NDAs.