IP Protection

In China, a non-disclosure agreement (NDA) is frequently used as many foreign businesses authorizes Chinese supplier to manufacture goods for them. NDA, also known as a confidentiality agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement, is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. It's a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects nonpublic business information.

China NDA and China CDA

NDAs are commonly signed when two companies, individuals, or other entities (such as partnerships, societies, etc.) are considering doing business and need to understand the processes used in each other's business for the purpose of evaluating the potential business relationship. NDAs can be "mutual", meaning both parties are restricted in their use of the materials provided, or they can restrict the use of material by a single party.

It is also possible for an employee to sign an NDA or NDA-like agreement with an employer. In fact, some employment agreements will include a clause restricting employees' use and dissemination of company-owned "confidential information."

Non disclosure agreement for businesses sharing innovations. A non-disclosure agreement (NDA), also known as a confidentiality agreement, is a low-cost way to protect your business' ideas. An NDA is a legal contract between you and another party. Typically, you agree to disclose information to them for a specific purpose, while they agree not to disclose that information to anyone else. This allows you to share your trade secrets with business partners while preventing them from passing this information on.

Why do you need a non disclosure agreement?

A: In order to attract and convince a potential business partner in the course of a business negotiation, you may wish to disclose to him/her some details of your product, ideas, invention, or even trade secrets. For example, in competition among firms bidding for job contracts, to safeguard your rights over the confidential information of your firm (irrespective of whether the bid succeeds or not), you as the bidder may require the potential business partner to sign a non disclosure agreement to protect your confidential information from being disclosed to third parties. If it were subsequently found that the information concerned had been disclosed without your authorization, the terms of the agreement would provide redress to you.

Apart from that, your employees may handle your organization’s confidential information, documents or other articles on a daily basis. To ensure that this confidential material is kept for internal use only, employers may consider requiring their newly-joined employees to sign non disclosure agreements to prevent unauthorized disclosure. We recommend that employees sign such agreements immediately upon reporting for work for the first time, and in addition at least each year after joining (to take account of changes to the company structure or new confidential information.) In addition, an employee should sign one more time upon leaving the company for whatever reason.

What matters are usually covered in a non disclosure agreement?

A: To start with, a non disclosure agreement must have the ‘confidential information’ defined. After setting out what is ‘confidential’, the agreement should provide for the obligation of confidentiality, that is how the parties are to handle the confidential information. This usually involves an undertaking by a party not to disclose the confidential information to any third party other than employees or agents (if access is provided to them, a further undertaking to bind these employees or agents to the same obligations of confidentiality) and not to use the confidential information for purposes outside the scope of agreement. If applicable, parties may wish to specify a time period during which the obligation of confidentiality is to be maintained. Certain exceptions to the confidentiality obligation may be considered, for example information that is already available in the public domain and disclosure mandated by a court order. Moreover, remedies should be provided in the event that the non disclosure agreement has been breached.

The above list out the basic requirements of a non disclosure agreement. If you wish to prepare a tailor made non disclosure agreement, you should seek independent legal advice.
There are five important elements in a nondisclosure agreement:
•definition of confidential information
•exclusions from confidential information
•obligations of receiving party
•time periods
•miscellaneous provisions

An non-disclosure agreement may be unilateral or bilateral, that is it may bind only one party or multiple parties (typically two):

Unilateral NDA

A unilateral, or a one-way, agreement is where one party wants to disclose certain information to another party but needs the information to remain secret for some reason, perhaps due to secrecy requirements required to satisfy patent laws[1] or to make sure that the other party does not take and use the disclosed information without compensating the discloser.

Bilateral NDA

A bilateral, or mutual, agreement is where both parties will be supplying information that is intended to remain secret. This type of agreement is common when businesses are considering some kind of joint venture or merger.

Some practitioners insist on a mutual NDA in all cases, to encourage the drafter to make the provisions "fair and balanced" in case the drafter's receiving-party client later ends up as a disclosing party, or vice versa (not an uncommon occurrence).

We are China NDA and CDA lawyers and drafting affordable contracts for clients.

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