The non-disclosure agreement complements the protection provided by law
In addition to the Trade Secrets Act, the company’s business and business secrets are protected by the Criminal Code and the Employment Contracts Act. In addition to the protection provided by law, trade secrets can be protected by means of non-disclosure agreements (NDA). A non-disclosure agreement protects important confidential information for the company and is usually concluded with the company’s contractual partners or employees. Entering into a non-disclosure agreement does not remove the importance of protecting the company’s intellectual property rights.
Contents of the non-disclosure agreement
A non-disclosure agreement forms a good starting point for all cooperation between companies, and it is often the first agreement that new partners make together. Non-disclosure agreements are made e.g. in connection with business acquisitions, development projects and cooperation agreements.
Within the framework of freedom of contract, a non-disclosure agreement can define the information to be kept secret and agree on the confidentiality of information beyond the provisions of the law. Typically, a non-disclosure agreement agrees on the following matters: the parties to the agreement, the purpose of the agreement, information to be kept secret, restrictions on the disclosure and use of information, the term of the agreement, and the sanctions resulting from a breach of the agreement, such as contractual fines and damages. In addition, the non-disclosure agreement often stipulates the processing, return or destruction of the data and the parties covered by the non-disclosure obligation.
A non-disclosure agreement can be concluded either unilaterally or bilaterally. When only one of the parties receives information to be kept confidential by the other party, the recipient of the information may be required to enter into a unilateral confidentiality obligation.
Terms of the non-disclosure agreement
The terms of the non-disclosure agreement must always be evaluated according to the purpose of the non-disclosure agreement and whether the agreement is viewed from the side of the party providing or receiving the information. In any case, the terms of the non-disclosure agreement must be reasonable for both parties. This is good to be aware of, e.g. in the case of the condition regarding the amount of the contractual penalty.
The damage caused by the breach of the non-disclosure agreement is most often indirect, which can be e.g. damage to reputation, lost profit, decline in turnover, loss of customers, etc. Thus, it is difficult to prove the damage caused by the breach of the non-disclosure agreement. With the contractual penalty clause, the injured party does not have to prove the amount of the damage caused, but it is enough to show the violation of the terms of the non-disclosure agreement. In addition to the contractual penalty, a non-disclosure agreement can also agree on the right to demand damages higher than the contractual penalty.
The non-disclosure agreement is valid for the contractually agreed contract period or until further notice. Is not always in the interest of either party that the confidentiality obligation is agreed to last for an indefinite period.
Between international companies, a non-disclosure agreement can even define the place of jurisdiction and the governing law for the following agreements. Once these have been agreed upon in a non-disclosure agreement, it may be difficult to change these terms in subsequent agreements.