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Using Confidentiality Agreements to Protect Your Intellectual Property

Updated on June 15, 2010

The Value of a Confidentiality Agreement

A Confidentiality Agreement is created when a user ("Recipient") agrees to preserve confidentiality relating to proprietary information ( "Confidential Information") obtained from the owner of the Confidential Information.

There are many situations in which a Confidentiality Agreement may be useful. Think of an arrangement between a small, but growing manufacturing company, and a marketing or IT firm. The manufacturer is likely to have formulas, processes and other information it would like to share only with the companies it establishes relationships with to help grow its business further. Often the information relating to these processes and formulas is among the company's most valuable assets.

A Confidentiality Agreement should make clear the relationship the parties have with each other. It should do this by identifying the line of business each party is engaged in and the purposes for which they have established their relationship.

The agreement should carefully identify the information that is expected to be held in confidence and the uses for which the recipient is permitted to use the information. It should be bounded in time and space as well as in purpose.

The agreement should typically make it clear that the recipient is being granted a limited license to use the information and that is the extent of the agreement. It's a good idea to place limits around which employees of the recipient who may access or use the information as well.

The information owner may wish to provide for remedies in the event of a breach of confidentiality, including money damages, injunctive protection, attorneys' fees and appropriate indemnifications.

Like nearly every agreement, a Confidentiality Agreement should be executed (signed) by all parties. The effective date will either be the date of execution or the date specified in the agreement itself.

Some good sources to visit on the web regarding Confidentiality Agreements are and If you are looking for an attorney to help you draft or negotiate a Confidentiality Agreement, try


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