What are the advantages and disadvantages of a noncompete clause as opposed to a nondisclosure clause?
Most businesses have valuable information that they don't want competitors and others to know about - marketing plans, customer lists, new product information, financial data, research results, manufacturing techniques, [ and more. These kinds of valuable, proprietary information are known as trade secrets.
Most businesses are understandably careful not to let
competitors and other outsiders find out about their trade secrets. They have many ways of keeping those secrets under wraps - marking documents "confidential" and locking them away when not in use, requiring passwords for company computers, and restricting photocopying are common methods.
But the most popular way to protect trade secrets these days is the nondisclosure agreement, or NDA. Also called confidentiality agreements, NDAs are contracts in which the signing parties promise to protect the confidentiality of trade secrets that one discloses to the other. If you sign an NDA with a client and you then disclose their secrets without authorization, you can be sued for damages, and the client can ask a court to stop you from blabbing any further.
NDAs can be used to protect any information that isn't generally known and that gives a business a competitive advantage in the marketplace. For example, an NDA can prohibit you from disclosing a client's product design, an idea for a new website, or copyrighted software code. These agreements can be included as clauses in an employment or independent contractor agreement, or they can be separate agreements.
Whatever form NDAs take, they're increasingly common. Many companies - particularly those in the Internet or computer business - now routinely require employees and independent contractors to sign them. Take Sabeer Bhatia. Founder of Hotmail, he made everyone who knew about his startup company sign an NDA. In two years, he collected more than 400 NDAs from employees, friends and roommates. He believes that his efforts to keep a lid on his startup's secrets helped him protect a crucial six-month lead on the competition. ]
There are no new answers.