Confidentiality (non-disclosure)

Registered rights (patents, design registrations and trade mark registrations) have been around for some time and each tends to be established by its own national statute or international convention. The notion of having a generic term for legal property rights of this type is much more recent and popularised by WIPO, which was originally identified as the World Industrial Property Organisation.

The term “Intellectual Property” was originally intended for the actual creation (the invention) but it is now often used to mean the legal property right (the patent). This should more correctly be identified as an “Intellectual Property Right” (IPR).

Reference to “protecting” intellectual property may be interpreted as preventing another party from making use of it. This prevention may be achieved by:

• keeping the information confidential; or
• enforcing a legal right. 

Sometimes the IP may be such that the maintenance of confidentiality is achievable. However, in many cases some level of disclosure is necessary in order to commercially work or exploit the IP.

A Confidentiality Agreement allows information to be disclosed to a recipient on the understanding that the recipient will maintain confidentiality and not disclose the information to any third party. The term “non-disclosure agreement” or “NDA” has no legal basis under English Law (being imported from the US) but emphasises that the second disclosure to the third party should not take place. 

It is possible to obtain an injunction to prevent the working of the confidential information if the information was received in breach of confidence. Thus, a basic agreement effectively provides evidence that the information was originally disclosed in confidence. The confidentiality was then breached by disclosure to the third party. However, a more complex agreement may include provisions for damages and may stipulate measures to be taken to safeguard the confidentiality.

Confidentiality agreements are only effective while the information remains confidential. Thus, the originator must maintain confidentiality. Furthermore, it is not possible to establish a confidentiality agreement with every interested party in the industry: the information, as a matter of fact, must have an inherent level of confidentiality.

It is prudent to mark confidential documents as such:

CONFIDENTIAL    or    In Commercial Confidence

While also enforcing a policy to the effect that any document marked in this way must be handled appropriately.