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Confidentiality and Nondisclosure Agreements: Three San Diego “Must-Use” Circumstances

Confidentiality and nondisclosure agreements are essential to any San Diego business. A confidentiality and nondisclosure agreement is an agreement that protects the confidentiality of your company’s data and trade secrets. These agreements are not just for inventors or for those with secret recipes like the Coca-Cola Company. They are necessary any time your business might be disclosing information that is commercially valuable or that is required to be protected by federal and/or state law. On January 1, 2020, the California Consumer Privacy Act will go into effect. Among other things, the new law requires that consumer information be kept confidential and private. As such, confidentiality and nondisclosure agreements will become even more important. An experienced San Diego corporate attorney can help ensure you have solid, effective, and enforceable agreements that are tailored to the specific and unique needs of your business. Here are three circumstances in which these are “must-use.”

Consumer Data Access: Employees, Contractors, and Vendors

In this day and age, it is a rare business that does not collect data about and from their consumers. At the very least, most businesses collection basic information like names, addresses, phone numbers, email/online contact information, and real-world shipping addresses. Under the new California Consumer Privacy Act, much of that information must be kept private and confidential. Now, consider how many of your employees, contractors, and/or vendors might have access to that data. Confidentiality and nondisclosure agreements should be routine for employees even for so-called low-level employees like a sales clerk or a cash register operator who might have access to credit card information. A confidentiality and nondisclosure agreement is certainly needed for any person that might have access to computer systems, databases, and any other data storage forms.

Proprietary Information Access/Disclosure: Employees, Contractors, and Vendors

Aside from consumer and employee data, confidentiality and nondisclosure agreements are a “must-use” when anyone has access to your company’s proprietary information such as customer lists, customer habits, vendor sources, business models, inventions, trade secrets, and the like. Your trade secrets are valuable and must be held in confidence/secrecy in order to be afforded legal protection. The law and the courts will not punish the theft of a trade secret if your company has done nothing to protect the trade secret. A confidentiality and nondisclosure agreement is the first and most important step. Do not limit your concept of “access” to the typical vendor that might provide computer or network maintenance. Keep in mind that every department has proprietary information that is valuable and that needs protection. Consider the marketing department, for example. They might have the main responsibility for website content, customer lists (including email addresses), control over the content of social media accounts and other advertising accounts. You cannot give an outside marketing consultant or vendor access to that information without an agreement covering its protection.

Mergers and Acquisitions and Potential Investors

If you are contemplating the sale of your business or the purchase/merger of another, confidentiality and nondisclosure agreements should be signed by everyone involved. A potential buyer will want this since, often, the proprietary information and trade secrets is what makes the potential purchase valuable. Likewise, any seller wants to maintain confidentiality and nondisclosure in the event that the deal falls through. This category includes disclosing information to potential investors or if a new business partner/owner is being considered.

California Business Contracts: Contact San Diego Corporate Law Today

If you would like more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard provides a full panoply of legal services for San Diego and California businesses including contract drafting and review. Mr. Leonard has been named “Best of the Bar” by the San Diego Business Journal for four years running. Like us on Facebook.

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