Confidentiality Agreement

Penny- Sheldon, we heard you read the letter from Howard’s father.

Sheldon-I did

Penny-What does it say?

Sheldon- I cannot tell you that. I am bound by closet organizor-organizee confidentiality.

Penny- You know there is no such thing!

Sheldon- Control over the information on the letter belongs to Howard. For instance, I came to know of it, but it doesn’t give me the right to disseminate the information freely.

Penny- Look the letter was found in Bernadette’s closet. Doesn’t that account for something?

Sheldon- Do you mean to say that California is a community property state, and since Howard and Bernadette are married, the IP contained in that letter is jointly owned by the spouses?

Penny- Yeah, obviously!

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Though, there may not be any terms such as closet organizor-organizee confidentiality there lies the concept of confidentiality in business and commercial relationships.

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1. Definition of Confidential Information

Confidentiality clauses, also referred to as non-disclosure agreements, serve to prevent the party signing the agreement from revealing sensitive information, including personally identifiable information (PII) and trade secrets. These safeguards extend to both written documents and spoken communications. The terms of the confidentiality clause are open to negotiation, allowing parties to tailor them based on the scope and obligations deemed necessary.

The primary objective of a confidentiality clause is to shield a company from the unauthorized disclosure of its trade secrets and sensitive information. To ensure the confidentiality of personal information, it is essential to incorporate such clauses into both document and email communications. Irrespective of the communication methods employed, industry specifics, or job positions involved, a confidentiality clause provides companies with protection in the event they need to pursue damages against someone who has disclosed crucial details, regardless of whether the intention was to exploit the information or not.

Consequences of Employee Breach of Confidentiality

When individuals have access to confidential information, it is imperative that they refrain from disclosing it, irrespective of any existing agreements or contracts. Employees carry both ethical and legal responsibilities to keep such private information confidential. The following are potential consequences for breaching proprietary information:

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i. Termination

The foremost and apparent consequence is termination. Employers are unlikely to retain individuals who, either intentionally or negligently, divulge confidential information, as they cease to be valuable assets to the business. Employers typically have the legal right to terminate employment, even in the absence of a signed confidentiality clause, as a breach of confidentiality is viewed as a violation of the employment agreement.

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ii. Lawsuit

Employers may choose to initiate legal action, and if successful, the employee could be required to pay damages resulting from the lawsuit. For example, if a disclosed secret leads to a demonstrable loss of business or damage to the employer's reputation, the employee may be held financially accountable. Even in cases where quantifiable damage cannot be proven, employers may still be entitled to punitive damages.

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iii. Criminal Charges

In extreme cases, a breach of confidentiality could lead to criminal charges against the employee, particularly if involvement in the theft of proprietary data or intellectual property is established.

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iv. Reputation

Within specialized industries where businesses are well-informed about each other's activities, acts of breach can permanently damage an employee's reputation. This long-term consequence may adversely affect an individual's future job prospects.

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2. Example of draft clause of confidentiality for an employee by the employer

Confidential Information

Employee shall not, during the term of this Agreement or at any time thereafter, make unauthorized use of, or divulge to any other person or entity Company's trade secrets, confidential or other information as is described in Article……. without prior written permission from Company's ……………. This Confidentiality Covenant shall apply to, but shall not be limited to all information protected under……………………

At all times during the term of this Agreement, and after its termination Employee shall take all reasonable precautions to protect the integrity of and shall refrain from any use or divulgence of Company's confidential information and trade secrets including, but not limited to all files, tickler files, resource information, records, documents, drawings, specifications, equipment, customer lists, supplier lists or information, product, supplier or customer catalogs, and similar items relating to the business of Company, or copies thereof, whether the originals or copies were prepared by Employee or otherwise came into Employee's possession.

The confidential information and trade secrets described above shall remain the exclusive property of the Company and shall not be removed from the premises of the Company under any circumstances whatsoever without the express prior written consent of the Company.

If Employee breaches or threatens to breach ……………… Company shall be entitled to obtain injunctive relief containing such mandatory or prohibitory clauses as are necessary to prevent the continued breach of this covenant of confidentiality. Company shall also be entitled to any other remedies provided under this contract or at law. If the Company elects to enforce this Paragraph through a court of law of appropriate jurisdiction, the Employee shall be liable for payment of all court costs, attorney’s fees, and necessary expenditures, which the Company incurs.

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3. Which legal documents need to be notarized? Do NDAs need to be notarized?

Notarization of Documents in India is a process of verification of the authenticity of the document and validating its purpose. This process not only safeguards the signer but also upholds the intended function of the document. However, it's important to note that not all documents require notarization. Certain entities, such as financial institutions, banks, and the court system, mandate the notarization of documents to establish their legitimacy. Here are specific categories of documents that typically necessitate notarization:

Financial Documents: Various financial documents, crucial for transactions and agreements, often require notarization. This includes:

? Mortgage closing documents

? Property deeds

? Loan documents

? Specific types of credit documents, like credit reports

? Financial statements

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Legal Documents: Documents and legal forms pertaining to ownership and legal responsibilities frequently require notarization. Examples include:

? Wills and trust deeds

? Advanced directives

? Custody and guardianship agreements

? Executorships

? Court documents

? Power of attorney

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Business Documents: While notarization is not mandatory for all business documents, many crucial ones benefit from this process. These may include:

? Vendor and supplier contracts

? Articles of incorporation

? Commercial leases

? Memorandum of understanding (MOU) documents

? Employment contracts

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4. Do NDAs need to be notarized for their legal enforcement?

While it is not obligatory to notarize or have a Non-Disclosure Agreement (NDA) signed by a witness, parties may opt to include witnesses in the NDA signing process. This additional step is taken to enhance the document's validity and enforceability, aiming to prevent potential challenges in a court of law.

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