The resources available to well established and larger companies mean that products can be copied and on the shelves in a matter of weeks, wiping out months of hard work by new or smaller businesses.
Designs and processes can be protected by patents and registrations, but on a more day-to-day basis businesses need to protect new and innovative products from being copied. The answer is a non-disclosure agreement (NDA).
An NDA is a binding document that all parties sign before they start to talk. Depending on how it’s drafted, it’s generally designed so that any discussions between the two parties remain confidential and will not be disclosed to a third party.
For example, an artisan food producer with an original and innovative product may ask a large retailer or manufacturer to sign an NDA before they meet to discuss a possible manufacturing agreement, listing or distribution deal.
Common content for an NDA includes the names of the parties, a description of exactly what is confidential information, a time limit on how long confidentiality must be held, and what will happen if the agreement is broken.
The type of information that can be included under the umbrella of confidential information is extensive. Any information that flows between the parties can be considered confidential, including packaging designs, know-how, techniques and product specifications. This list is certainly not exhaustive, but does illustrate the breadth of items that can be deemed confidential.
In addition, the agreement can state what any information may be used for (for example, to evaluate a product).
There’s often a clause that states that any samples and other information handed over will be returned, although in these days of electronic storage and emails, this may be harder to enforce.
A refusal by a retailer or other party to sign an NDA, however, is a real possibility, and a business in this situation is left with limited choices: carry on without the agreement or walk away. Neither is ideal, but it would be a business decision to be made at the time, with the risks and potential rewards fully appreciated.
An NDA may seem like yet another piece of paperwork for a small producer to think about, and indeed not everyone has one drawn up. Yet, when the potential damage that could be done is considered, it’s a worthwhile investment.
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