As a marketing and communications professional you will often find yourself working on campaigns with the involvement of third parties (which goes for most departments). Such a collaboration cannot be established without sharing (sometimes sensitive) information. Protecting your interests is, therefore, an important topic within every company, large and small.
Within SME’s, theDMS’s recurrently rely on the well-known gentleman’s agreement (handshake). Unfortunately, practice experience has shown us that the gentlemen’s agreement can come at a cost when one of the parties decides to use to disclosed information for its own gain. The end result: a financial loss for one of the parties and at best the partial loss of the ability to have faith in others.
Another scenario we often witness is parties holding back valuable information (secrets of the trade and intellectual property) while that specific information would strengthen their position in the negotiation process. This too comes at a cost, for it undermines their margin for negotiations. Interestingly enough, while this subject holds such value for companies, legions of professionals are actually not aware of the possibilities they have to avert these risks:
The majority of the larger companies take proactive measures to minimise their level of risk with the use of a CDA –confidential disclosure agreement-. A CDA is a contract in which parties agree on keeping specific information confidential. Another commonly used term for these contracts is an NDA – non-disclosure agreement- which is, in fact, exactly the same. Prior to the negotiation process, the CDA is drafted and signed (when agreed upon) by all parties involved before (further) information is interchanged.
If certain information has been disclosed prior to the signing, then find a way to enclose that information in the contract afterwards.
While some professionals see a CDA as a sign of distrust or a lack of respect, it should not be seen as such. A CDA is nothing more than a tool to avert risks, something a sound business party should always strive for.
What should be part of your CDA?
A proper CDA contains the following:
- The parties the contract applies to (name and address)
- The duration of the contract (term in which the information is to stay confidential and cannot be used by the other party): usually a couple of years
- A description of all information deemed confidential ( For instance: research, passwords, information about systems, client information, financial information, product development intel and strategic plans)
- A brief about the intellectual property
- A definition of the purpose of the contract
- The extent of the confidentiality (who can information be shared with etc.)
- The consequences of breaching the agreement
- Possible additions to the interest of one or more parties
- Exclusion of liability based on offered information
- Governing Law and Jurisdiction
- It goes without saying that every page needs to be signed by all parties involved.
Besides all elements as stated above, we also recommend that you include a paragraph with exceptions. This means that you include a paragraph in which you state that the contract will not apply to confidential information that has reached the public domain (without your companies’ interference). Confidential information that has fallen into your possession following a take-over of or collaboration with another party who is not held by the agreement. We also strongly advise you to insert a clause in the agreement that any (proven) information that was already in your possession prior to the negotiations is excluded from the contract.
When do you use a CDA?
A CDA, as used in the before mentioned paragraphs, is a mutual agreement. This type of contract is used when you are exploring the possibility of a joint venture or partnership.
Unilateral CDA’s are also commonly used, these are contracts made to protect a specific party. You should create a unilateral CDA when you outsource development processes (or outsource commercial activities), when you hire new staff, when you share client information with another party or when you work with sub-contractors.
It is advisable to have a lawyer, specialised in IP (intellectual property) or corporate law, to draw up your contract. Especially when you have already exchanged information without a contract in place. A skilled lawyer will find ways to minimise your risks as much as legally possible.