When a company cooperates with a supplier, its employees, investors, freelancers and other companies or parties, sensitive information and business secrets are often exchanged or disclosed. This exchange can already take place when two parties initiate a contract. However, it is essential for a company to preserve information and be treated confidentially by a contractual partner. Therefore, non-disclosure agreements (NDA) are necessary for ensuring the confidentiality of information that is not to be made accessible to the public.
Should you have any questions or require individual and personal legal advice regarding NDAs in Germany, please don’t hesitate to get in touch with the lawyers of Schlun & Elseven Rechtsanwälte.
Legal Protection through Non-Disclosure Agreements (NDAs)
The non-disclosure agreement (NDA) is a contract, and it serves to protect confidential information. The parties declare to treat the information to be disclosed and made accessible based on cooperation as confidential and to maintain it. Since the exchange of internal and sensitive information is already possible during the initiation of a contract, NDAs are often drawn up and signed before a company negotiates an agreement with its business partners. There are two possible types of NDAs, bilateral and unilateral agreements. While the two-sided non-disclosure agreement obliges two parties to maintain confidentiality, the one-sided non-disclosure agreement only instructs one party to keep the information confidential. Whether the bilateral or the unilateral deal is more appropriate depends on your business plan.
As NDAs are designed to protect trade secrets, § 2 No. 1 GeschGehG outlines what information constitutes a trade secret within the meaning of the said Act and is thus deemed to be particularly worthy of protection:
A trade secret is “[…] information
- (a) which is not generally known or readily accessible, either as a whole or in the precise arrangement and composition of its components, to persons in the circles which normally handle that type of information and is therefore of commercial value; and
- (b) which is subject to reasonable confidentiality measures under the circumstances by its rightful holder; and
- (c) for which there is a legitimate interest in secrecy […]”.
A confidentiality clause in a contract or reliance on the contractual partner’s intention to maintain secrecy is often insufficient to obtain adequate protection. Companies are advised to sign a non-disclosure agreement to secure their rights, establish a breach of duty (in case of a violation), and assert claims.
We will be happy to advise you in this regard. Please don’t hesitate to contact our law firm today using the online form below for further advice on non-disclosure agreements in Germany.
Content of Non-Disclosure Agreements
Since a non-disclosure agreement is free of contract restrictions, the parties are free to draft it as they wish. Nevertheless, it is advisable to define or stipulate some points clearly.
Non-disclosure agreements should state which agreement binds parties and why the parties need such an agreement. The latter means stating the nature and scope of the cooperation.
The agreement should also specify what information is considered confidential. The information meant can be explicitly named to determine this more precisely. It is also advisable to mark information that is not to be treated as confidential as such. The parties can specify the contract duration and penalty specified.
Confidential Information within Non-Disclosure Agreements
The non-disclosure agreement specifies which information is to be treated confidentially. On the other contract may determine what information is not covered. This non-confidential information includes, among others, information that is already known and information disclosed due to a requirement or similar. It should be noted that the definition of “confidential information” must not be too narrow but not too broad. Otherwise, gaps in the contract could arise.
Furthermore, it must be determined how the exchange of information is to be handled and what information can be made available to the contractual partner may be used. It is possible, for example, to precisely determine the employees who have access to the information to be protected. In the course of this, different levels of confidentiality are often defined, which indicate which information may or may not be disclosed to which party.
We also recommend determining how the information is handled after the contractual relationship has ended. We will be happy to support and advise you in this regard. Please don’t hesitate to contact us by e-mail or using the online form below if you require our assistance.
Breach of Non-Disclosure Agreements
If a trade secret has been violated, this can be punished as a criminal offence or with a fine. The breach of the non-disclosure agreement may also give rise to a claim for damages. However, this is often difficult. In the event of a dispute, the claim would have to be enforced in court. It is therefore highly advisable to stipulate a contractual penalty.
Practice Group:
German Contract Law
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