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How should one use non-disclosure agreements?
Non-disclosure agreements should be signed before a person sees, hears or otherwise learns confidential information of the company. In the case of a new employee, the agreement should be signed before the first day of work. If they sign after they start working or otherwise obtain access to the information, they should be given something of value in exchange for their signature (this may be necessary to make the contract binding). The agreement may contain, in addition to a non-disclosure provision, a provision requiring the employee to not compete with the employer for a period of time following the termination of employment. Non-disclosure agreements are not used with just employees, but rather anyone who has access to the confidential information.
A distinction needs to be made between agreements which have been read and those which have not. An agreement that has not been read may provide contract rights, but does not provide significant notice value. Agreements in Minnesota may also need to specify specific types of information that needs to remain confidential. Vague contracts provide little, if any, notice. Consider agreements for everyone who may have contact with sensitive information. Give the signer of the agreement a copy and place the other in the file.
Signed contracts, along with audits, are perhaps the most powerful tools in trade secret law. Beyond notice, contracts can be used to broaden the trade secret holder's rights and provide basis for asserting misappropriation (i.e., breach of contract). A well prepared non-disclosure/ non-compete contract is a must. Court's seem to decide for trade secret holder's in the presence of a contract and against the holder in the absence of a contract.
Updated: 11/12/99
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