Nondisclosure and noncompete agreements

Why should nondisclosure and noncompete agreements matter to me?

In recent years there has been an exponential rise in the use of confidentiality agreements to protect technology or confidential information. Science and engineering professionals will probably be asked to sign a confidentiality or noncompete agreement at some point in their careers. Science and engineering students participating in internships or co-ops also may be asked to sign one of these agreements. You need to be informed of the components of the agreement and your rights in order to make an informed decision.

What are nondisclosure agreements?

Nondisclosure agreements (sometimes called secrecy or confidentiality agreements) are agreements entered into by two or more parties that protect sensitive technical or commercial information (intellectual property) or trade secrets from disclosure to others. Simply stated, the recipient of confidential information will not share it with anyone else. The type of information protected by a confidentiality agreement can be virtually unlimited, and these agreements can prevent the forfeiture of valuable patent rights.

What is the difference between intellectual property and trade secrets?

Trade secrets are defined as “anything with independent economic value derived from the fact that it is not widely known or easily obtained." These secrets can include strategic plans, software code, or even recipes. Trade secrets differ from other forms of intellectual property because patents, trademarks, and copyrights require public registration of information in order to secure exclusive use for a fixed period of time. Trade secrets need never be revealed to anyone. A confidentiality agreement regarding a trade secret would likely have no end date.

What is a noncompete agreement?

Noncompete agreements are either a separate agreement or a clause in an employee handbook that prohibits an employee from working in a related business in a designated area for a specific amount of time.

What are the important elements of both types of agreements?

• Identification of the parties involved (employer and employee)
• Definition of what constitutes “confidential information
• The scope of the confidentiality obligation by the receiving part
• The exclusions from confidential treatment
• The term of the agreement
• The geographical area involved

What should I do if I am asked to sign a confidentiality or noncompete agreement?

• Ask questions—take the time to read and understand what you may be signing. The following are some questions you may want to consider:
• Is there adequate consideration? (Did you receive something in return for signing?)
• What legitimate interest is the employer seeking to protect?
• What is the scope of the agreement? (Is it unduly restrictive?)
• What impact will this have on you and any third parties? (Your future employers?)
• In many cases, you may have little choice but to sign an agreement. Because agreements protect employers (not employees), you may be forced to choose between signing the agreement and not accepting the position. However, you should know your rights and understand the ramifications of what you are signing.

Sample nondisclosure agreement (pdf)

Sample noncompete agreement (pdf)