Many of us may enter into business relationships or negotiations that require us to disclose confidential or otherwise secret information —practical, technical, perhaps financial. What obligation not to disclose this information is the recipient under, and what legal recourse do we have if our confidential information is communicated to a third party, or made public?
An agreement to regulate such situations is usually called a non-disclosure agreement (NDA), but may also be called a secret disclosure agreement, a private information agreement or a confidentiality agreement.
All are legally binding contracts that define the mechanism for dealing with confidential information that the parties wish to share with each other for specific purposes, while preventing the disclosure of such information to any third party. The name of the agreement may vary according to slight differences in purpose, although the basis of the agreement is the same — the protection of information. For example, if the contract requires one party to provide confidential data and the other to keep it secret, it will be an NDA. If the requirement is for two or more parties to share confidential data, it will be a confidentiality agreement.
Such agreements are widely used by companies and institutions when they are negotiating a contract. The parties undertake that any information circulated among them, whether regarding their budgets, projects or the identities of their partners, is considered confidential. An NDA will be signed before negotiations begin, to protect all parties from disclosure in the absence of a formal contract. If and when the contract is concluded, it will often contain a confidentiality provision so that the protection continues.
It is important to note that the submission of confidential information to another party to negotiations, including any technical data, should not be construed as granting a license or a right to use such information. If this is permitted at all, the purpose and scope of such use should be clearly specified.
NDAs and confidentiality agreements are also used in many other areas to protect the personal data of individuals, for example in hospitals or banks. They may also be used in the work environment to ensure the confidentiality of information disclosed to employees or external consultants. An employee may be required not to disclose the trade or professional secrets of his company’s work. Some have argued that such agreements impede and complicate the transfer of experience when an employee leaves one company and moves to another, but this should not be an issue as long as the scope of the confidentiality has been clarified so as not to compromise or restrict the employee’s personal skills and abilities.
Obviously, NDAs and other such agreements are an ideal way to protect confidentiality. However, their effectiveness depends on the skill of a legal practitioner in defining the terms and wording in a way that protects all parties, whether supplying or receiving confidential information, and suggesting fair ways to prove any violations.
Dimah Talal Alsharif is a Saudi legal consultant, head of the health law department at the law firm of Majed Garoub and a member of the International Association of Lawyers.
Twitter: @dimah_alsharif
