Most businesses are likely to have information that is highly sensitive and confidential. This could include technical information such as manufacturing processes, designs and concepts or potentially patentable ideas. It could also include commercially sensitive information such as price or customer lists, business plans, payroll or accounting data.
Whilst this information falling in the wrong hands may not actually result in the sky falling in on Western civilization, the consequences for the business can be deadly. It is therefore vital that business take every step to keep such information secure.
Of course, as with any secret the best way to ensure that it remains confidential is to tell nobody. However, that is almost certainly not going to be practical. At the very least it is going to be necessary to allow certain employees within the business access to such information to enable the company to exploit it. As a matter of good practice a confidentiality clause should therefore be included in all employment contracts and clear, practical policies put in place on how information is to be handled (eg. IT, email and social media policies and restrictions on removing information from the company’s premises/IT systems).
However, there will also inevitably be occasions where it is necessary to disclose confidential information to third parties outside of the business. This may for example be in connection with a tendering process or the performance of a contract. It could also arise where the business is considering a sale or potential joint venture. In these circumstances it is important that the business enters into a confidentiality agreement before any confidential information is disclosed.
A confidentiality agreement (also known as a non-disclosure agreement (NDA) or secrecy agreement) should be carefully drafted to ensure it provides an adequate definition of what constitutes confidential information. The agreement should obviously bind in the party to whom the information is disclosed but it may also be appropriate to bind in other parties to the agreement (such as subsidiaries or parent companies). At the very least there should be an obligation on the third party limiting its ability to disclose to others and then only in circumstances where it has procured that those parties will also keep the information confidential.
In the event that a confidentiality agreement is breached, it is unlikely that monetary damages will itself prove an adequate remedy. Accordingly, the agreement may also expressly include other remedies (such as the right to seek an injunction).
We would of course strongly recommend that confidentiality agreements are professionally drawn up to ensure they are appropriate for the situation and will be legally binding. However, even with a robust agreement in place the best practical advice as regards confidential information must be to work on a need to know basis (who, when and how much).
After all, you want to avoid the SPECTRE of the opposition exploiting your secrets. Disclosure is forever. So when it comes to keeping information confidential, you only live once!
For further information or advice, please contact Martin Frost.
Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.