Market law: confidential information and trade secrets – what’s the difference?


Many business lawyers have forms for non-disclosure agreements (often referred to as “NDAs”), and many of these lawyers occasionally receive requests from their clients to draft NDAs between their clients and third parties. . Some of these confidentiality agreements are one-way agreements, meaning that one party is only a discloser and the other is only a recipient. But some of them are bilateral agreements, i.e. both parties are both disclosers and recipients.

Personally, I’m not a huge fan of using NDAs when my clients are the whistleblowers, as it’s often so easy for recipients to rape them without getting caught. If you are a business owner in New Hampshire and are considering disclosing information to one or more third parties that you want them to keep secret, a key question to think about is whether you can trust it. to the recipients. If you are not sure you can do so, do not disclose unless you absolutely have to to make a deal. Yes, ask recipients to sign an NDA; but make no mistake, it will work.

However, if you do decide to make the disclosure, you should be aware of the difference between information that is considered a trade secret under New Hampshire law and information that is simply confidential and not a trade secret. One of the reasons it is important for you to know the difference between these two types of information is that if you enter into an NDA as a disclosing party with a recipient, if the NDA only covers trade secrets and if the information you disclose consists of information that you want to keep secret but that is not, technically, a trade secret under New Hampshire law, you may find that if the recipient discloses the information and you sue them, you will lose your case.

So what is a trade secret and what is not? Information is considered a trade secret under New Hampshire law only if it meets the following three criteria:

1. This is information in your possession which is not commonly known to the public;

2. It actually or potentially has economic value to you because it is not known or legally verifiable by others who may derive economic value from it; and

3. You have made and continue to make reasonable efforts to keep it a secret.

So, for example, if, under an NDA, you disclose information to third parties that you wish to keep secret but the recipients cannot derive economic value from, the information will not be protected under the NDA if, in its terms, the NDA only covers trade secrets as such.

Likewise, if you disclose information to third parties under a confidentiality agreement that you want to keep secret (for example, because disclosing the information may be embarrassing to you or your business), but you cannot not prove that the information has economic value to you, in this situation too, your NDA may be of no value.

What does all this mean in practice? This means, among other things, that if you plan to disclose confidential information to a recipient under an NDA with the assistance of a lawyer:

– You must describe very carefully to the lawyer each of the different information you want to protect; and.

– You should make sure that the terms of the NDA form that your lawyer plans to use for you expressly protect each of these types of information.

If not, make sure your lawyer changes it to do so.

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