Common mistakes that leave proprietary information unprotected
Too many business owners neglect to take the necessary steps to protect their proprietary information. Often, they don’t realize just how valuable this information is and how risky it can be if it gets into the wrong hands or becomes public. Taking legal action after such information has been disclosed is more difficult if there was no legal document in place to protect it. It also won’t undo the damage that’s already been done.
One of the most common errors that business owners make involving their proprietary information is not requiring the appropriate people to sign nondisclosure agreements (NDAs) and similar contracts before they begin work or any information is disclosed to employees, contractors, consultants, vendors and anyone to whom you disclose or give access to proprietary information.
Another common mistake that business owners make is drafting these agreements but then not having employees and others sign and/or date them. These may be unenforceable.
After an agreement has been signed and dated, it’s essential to keep a copy in a secure location. Too often, companies lose or misfile their agreements. This is an easy mistake to avoid if you have a system in place for ensuring that everyone signs all necessary paperwork before beginning their job and for maintaining these documents in a secure location.
Another thing that can lead to inadvertent disclosure of proprietary information or confusion around what is confidential is commingling it with routine, nonconfidential information. Proprietary and confidential information should always be placed in separate documents, clearly marked “Confidential” and disclosed only to those authorized to see it.
Some business owners fear that asking employees to sign these agreements will indicate a lack of trust. However, they’re often a necessary part of doing business. As long as they’re used consistently, there’s no reason why anyone should be offended by being asked to sign one. They protect all parties.
There’s one final mistake that’s easy to avoid: Don’t assume that you can use a “standard” NDA or a template off the internet. Your agreements should be written to meet the unique needs of your company. An attorney who’s experienced with business contracts and who knows the applicable New Jersey laws should draft or at least review any contracts before you implement them. This can save you considerable time, money and trouble later on.