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Non-Disclosure Agreements: Ensuring Meaningful Coverage in the Digital Age

Writer's picture: Dcmmoguls DesignDcmmoguls Design

Updated: 5 days ago




In today's fast-paced digital world, safeguarding your company’s confidential intellectual property (IP) from unauthorized disclosure is crucial. 



NDAs Matter in the Digital Age More Than Ever 


Solid non-disclosure agreements (NDAs) are useful to tech companies because:


  • Digitally-Stored Data Is Easy to Trasmit: Contractors, vendors, and other third parties who have legitimate access to IP may eventually turn on you and become hostile. If they copied confidential IP on a thumb drive while their access was legitimate, they might use or disclose your data. If, however, they signed strong NDAs, they might be deterred from stealing. This is especially true if you earned a reputation for enforcing NDAs. 

  • Digitally-Stored Data Is Not Always Marked CONFIDENTIAL: Some NDAs require marking of Confidential IP transmitted under an NDA. When the lawyers know the terms of agreements but the engineers do not, sometimes data is transferred without the proper marking. Train your team who will be disclosing or receiving information under the NDA how to comply.




Reviewing Important Terms in Your NDAs


  • Purpose: Having a “Purpose” defined clearly draws useful lines that inform the teams living under the NDA exactly what information is covered by the NDA and what information is not.  

  • Confidential: This definition of “Confidential” is where marking requirements are often set forth. In some cases, information might be not covered by the NDA if the information being exchanged is not marked “Confidential.” This definition should exclude information already in the public domain and information that becomes known through no fault of the receiving party. 

  • Disclaiming Damages for Consequential Damages: This type of waiver or disclaimer can harm a disclosing party because certain jurisdictions take the position that there are no direct damages in NDA breach cases. Rather, their position is that all damages are consequential to the actual breach. Be aware of the law of your jurisdiction before agreeing to such a term.

  • Term of Agreement versus Length of Confidentiality Obligations: The term of agreement is often short to explore a business opportunity.  The term that one must treat the information received as confidential varies widely depending upon the business needs. Often, original equipment companies require an unusually long term of confidentiality of those who wish to be in their supply chain.

  • Injunctive Relief: The disclosing party in an NDA will want certain acknowledgements and agreement that breach of confidentiality obligations will cause irreparable harm for which monetary damages would be an inadequate remedy. This is meant to assist the disclosing party seek an injunction if a third party uses confidential information in, for example, seeking a new job or setting up  competing company.



Panagos Kennedy PLLC Can Negotiate Your NDAs


Troy-based Panagos Kennedy PLLC drafts and negotiates NDAs to meet your specific needs, whether you will primarily be a discloser of confidential information or a recipient of third-party confidential information. Visit our website to learn more.

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