When dealing with trade secrets, it’s important to have a strong contract that prohibits the confidential information from being improperly disclosed. Without the right written support, the intellectual property could be compromised by the receiving party without penalty. Similar to that old “chain saying,” a trade secret is only as strong as the weakest article in the contract.
As St. Petersburg construction lawyers, we offer contractors assistance reviewing, revising, and drafting contracts to ensure protection.
In this five-part article, we first focused on the legal definition of trade secrets. In the second section, we discussed the elements to create a trade secret claim. In this section, we will focus on how to protect trade secrets in the contractual context. In the fourth section, we will discuss remedies for the misappropriation of trade secrets. In the fifth section, we will conclude our series.
The Nondisclosure Agreement
When agreeing to terms of a contract, it is in the contractor’s best interest to add a nondisclosure agreement that implements the protection of any trade secret that the contractor should have a proprietary right to. This confidentiality agreement should define exactly what the intellectual property is (technique, device, method, formula or information) and what resources are involved in creating this trade secret (design specs, blueprints). The clause should also include that both parties (the owner of the information and the receiving party) mutually acknowledge that this information qualifies as confidential and needs protection.
Other Important Factors
The specific circumstances and conditions of the trade secret need to be closely documented in the agreement as well. Is there a specific duration for the confidentiality of this trade secret? What employees may have access to this information and under what conditions? What resolution or possible penalty may occur if this information was misappropriated? All of these issues and much more should be included in the contract to protect a trade secret.
Adding Additional Clauses
It never hurts to have signed acknowledgements from any party that is permitted access to the information. It’s also wise to include a clause that prohibits the solicitation of any of the contractor’s subordinates. Without this clause, one of the contractor’s employees that has in-depth knowledge of the trade secret could essentially “switch sides” and lift the confidential information from the owner’s possession by proxy.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.