Businesses are often dismissive of confidentiality. Non-disclosure agreements (NDAs or confidentiality agreements; they are the same thing) are often short documents and money does not necessarily change hands to make them effective. In summary, they are easily overlooked or treated as a pre-negotiation formality. But are businesses right to dismiss them?
King Pyrrhus was the king of a powerful tribe in Epirus that defeated the Romans in two battles between 280 and 279BC. In doing so, his army suffered immense casualties and his army was irreparably depleted. Pyrrhus’s army was significantly outnumbered in battle against the Romans and no permanent gains were made by these victories against the Romans.
Enforcing non-disclosure agreements, or seeking reparation when an NDA has been breached, can be an expensive and time consuming task. Even if you are successful, you will never truly be in the position you would have been in had confidentiality not been breached – your secret cannot be untold. In this respect, it is tempting to agree with those who dismiss the importance of putting an NDA in place.
Enforcing non-disclosure agreements may sound like a Pyrrhic victory, but let us consider the analogy further.
Pyrrhus’s army was small (relatively to the Romans) but went a long way. The power of an NDA should not be underestimated and their use remains best practice. An NDA may allow you to share your innovative ideas and negotiate confidently with a much bigger, more powerfully resourced business. Ultimately – do you really want to negotiate with a third party who does not agree to enter into an NDA and promise to protect your confidential information?
Further, if an NDA is not in place (or if you didn’t have an army), you would have no recourse in the event that your confidential information was disclosed without your consent (or, if you were Pyrrhus, the Romans attacked the Greek-speaking population of southern Italy). The purpose of any contract is to set out the agreement reached between two parties. An NDA is no different. It sets out the basis on which you share information with a third party and, if they breach the terms of that agreement, you have recourse to specific remedies. A well drafted NDA will always make it clear that financial remedies alone are not sufficient to put you back into the position that you would have been in had the breach of your confidentiality not occurred.
The stakes are high – failing to ensure confidentiality can have significant consequences, ranging from loss of business opportunity to the inability to apply for patent protection for your new invention.
King Pyrrhus left the shores of Epirus to defend overseas Greek-speaking populations from the Romans. No man is an island and if in doubt about the content of a confidentiality agreement, you should always seek the advice of a professional. Stephens Scown IP and IT team have a track record of assisting clients in relation to confidentiality contracts and NDAs.