Most companies possess confidential information which is an asset of the business. Indeed, the information may be the company’s most valuable and marketable asset. Confidential information includes know-how, client lists, data, marketing plans, business methods, production processes, recipes and chemical formulas, software algorithms and source code, or any specific item that sets one company apart from another. In the regular course of business, a company will share, receive, and exchange its confidential information with employees, customers, vendors, and other parties. Companies derive competitive value from the exclusive use of its confidential information and its selective (strategic) sharing of it. Failure to enter into an enforceable non-disclosure agreement protecting this asset can easily result in significant financial loss and competitive disadvantage to the disclosing party.
To protect itself and its confidential information, a company must take steps to safeguard its confidential information. The most direct approach is to have a confidentiality agreement, more commonly referred to as a non-disclosure agreement, to address those situations where a company will be sharing its confidential information. A company may share its confidential information with another party (unilateral) or the parties may mutually exchange information (mutual). In a unilateral exchange, a company may disclose its confidential information to an employee or a consultant, and this exchange is one-way: the company is the discloser and the employee or consultant is the recipient. In a mutual exchange, each party discloses confidential information to the other, and so both parties are treated both as a discloser of information and a recipient of information. There are specific types of confidentiality agreements to address these different situations.
The Business Law Team at Maiello Brungo & Maiello can discuss with you the best practices to protect your company’s confidential information using well-drafted confidentiality agreements and other policies and programs to comprehensively secure your organization’s most valuable assets.