Confidentiality

Confidentiality - ensuring that information is not publicly known - can safeguard knowhow and a few types of invention (e.g. the Coca Cola formulation), but only for as long as sufficient secrecy can be maintained.

Confidentiality restrictions can be particularly useful during initial business discussions (safeguarding commercial lead time; preserving freedom to apply for patents and registered designs; retaining the freedom to break off discussions; all without losing rights)

Confidentiality Letters or Agreements are normally used to establish confidentiality (see Example Confidentiality Letter). Typically, such agreements may be one-way (i.e. where information is given or received in confidence by one party) or mutual (i.e. where two or more parties may each exchange confidential information with the other[s]). How you look at such agreements will generally depend on whether you are disclosing or receiving confidential information.

If you are disclosing information then you should ensure that the confidentiality conditions only permit the recipient to use the information for the purpose you intend at the time (e.g. if information is being disclosed for one particular purpose, the recipient should not be permitted to use it for other purposes) and that any information you provide is automatically treated as confidential. You should watch out for any "exceptions" (there are standard exceptions which are normally acceptable and reasonable, but sometimes they can be over-extensive); be clear about how long confidentiality must be maintained and about what happens to information if the parties don't proceed as anticipated (e.g. physical copies should normally be returned).

Conversely, if you are receiving infomation in confidence then your interests will normally be to ensure that the minimum of infomation is treated as confidential (e.g. that information will not be considered confidential unless appropriately marked); that relevant "exceptions" are provided, particularly in cases where you may receive or obtain information from another source without an obligation of confidentiality; and that you are permitted to use the information as freely as possible!

If you are both disclosing and receiving confidential information then clearly you will need to establish a balanced position between the two situations.

In any event, beware any confidentiality agreement which refers to "residuals" - do take professional advice if you want to understand the potential effect of such an agreement!

Advantages: Cheap; potentially very long-lasting and international; protection is guaranteed so long as confidentiality is maintained.

Disadvantages: Limited applicability (only inventions and knowhow that cannot be reverse engineered); difficult to maintain and enforce.

Costs: Low (professional advice on confidentiality letters or contracts may be required); however, maintenance of confidentiality long-term can be expensive simply because of the need to maintain security and keep detailed records of what has been disclosed to whom and when.

Marking: Marking is not formally required, but it is recommended that information made available to another party under conditions of confidentiality should be marked as "Confidential" and a record kept of what is handed over when.

PAGE HARGRAVE can provide short-form or customised confidentiality agreements for you to use and can advise on the terms of agreements you may be asked to sign. We would certainly recommend that specific legal advice should be sought by anyone who is not familiar with the use or implications of confidentiality agreements. Otherwise you may find that an agreement either does not provide the protection you thought it would, or restricts you more than you wanted.