The confidentiality agreement in brief

With respect to project developments, often times it is necessary to engage in discussions with third parties,  including strategic information concerning the project without binding the parties to any cooperation agreement that regulates their working relationship.

However, it is important that the confidential nature of this information be preserved to protect the owner of the ‘strategic information’ and any advantage it affords them.

In particular, in patent law, one of the conditions for obtaining a patent is the novelty of the invention. Any premature public communication of the invention can thus deprive its owner of a patent.

In this situation, it is typical to resort to a confidentiality agreement prior to any discussion with third parties. A confidentiality agreement, also known as a non-disclosure agreement (NDA), is a contract by which at least one of the parties agrees not to disclose information deemed confidential by the other party.

The information communicated and its corresponding confidentiality can be financial, strategic and/or technical data in nature. The confidentiality agreement may cover any form and/or medium of communication of this information such as oral, written, electronic, CD-Rom, etc.

The contract could be “unilateral”, i.e. only the party receiving the confidential information undertakes not to disclose the information received. This type of contract is generally used when the party receiving the information does not need to communicate information of a confidential nature in the course of the exchange.

On the other hand, when the exchanges require the communication of confidential data by each of the parties to the contract, then the contract is “bilateral” so that each party is bound by a non-disclosure obligation towards the other party.

In order to construct a proper confidentiality agreement, it should include the parties to the contract, the scope of the contract, including its purpose and the information to which the contract applies, including  the persons to whom the information may be disclosed without violating the contract and the duration of the contract. The obligations of the parties should also be carefully drafted. It is preferable to bind the parties to an obligation of what not to do, i.e. not to disclose the information, rather than to an obligation to do, i.e. to keep the information confidential. Non-disclosure of information covers all cases of disclosure of information by the party receiving the information, including the communication of confidential information to a third party or the actual use of the information for its own benefit.

The party receiving the confidential information, who undertakes not to disclose the information received, is bound by an obligation of result. In the event of failure to comply with this obligation, it is contractually liable without the injured party, i.e. the party providing the information, having to prove any damage.

It is strongly advised to finalize the confidentiality agreement before any exchange of information. It may happen that the third party does not wish to sign a confidentiality agreement. In this case, it is important to ensure that any document communicated is accompanied by a confidentiality statement.

Our experts at GEVERS & ORES are available to assist you and answer any questions you may have in this regard.