Home > Topics > Contracts and Agreements to Support Partnerships > Confidentiality Agreements: A Basis for Partnerships > Editor's Summary, Implications and Best Practices

Trust is the universal prerequisite for a sound partnership. Before parties enter into a relationship, they must have a certain level of trust in each other. Trust can create further opportunities for partnership and collaboration. Trustworthiness, as an intangible asset, is invaluable.

During collaborations, and in some types of licensing agreements, materials and confidential information are often passed from one party to another. Confidentiality agreements (also called “nondisclosure agreements,” “confidential disclosure agreements,” and “secrecy agreements”) are contracts that govern the disclosure of confidential information by one party (the disclosing party) to another party (the receiving party). The disclosure may be unilateral (the flow of confidential information only goes one way), bilateral (two parties disclose information to each other), or multilateral (three or more parties disclose information among themselves). A confidentiality agreement is an agreement to keep confidential information secret. Confidential information is information that is valuable because it is not known to business competitors or to the public.

Key provisions in a confidentiality agreement include:

• Disclosing party/ies: the person(s) or organization(s) providing confidential information;
• Receiving party/ies: the person(s) or organization(s) receiving confidential information;
• The purpose of the agreement: for example, the confidential information is provided for purposes of evaluation
• Limitations on disclosure: the confidential information must not be disclosed to any third party
• Important exceptions: circumstances under which the obligation of confidentiality is inapplicable (for example, the information was already in the public domain … commonly known)

Other possible clauses in a confidentiality agreement include:

• Limitations to disclose: the amount of information that can be disclosed
• Conditions on the use of the confidential information: an detailed description of the ways in which the receiving party may (and may not) use the confidential information
• Representation: the information disclosed
• Requirements for documentation: keeping track of the disclosed information, whether disclosed in writing or orally (for example, telephone conversations committed later to writing)
• Security: specific prohibitions against the copying of confidential information, recordation of access, and clear marking

Confidentiality agreements (and, in fact, all agreements) should be governed by two guidelines. First, if there is no trust between the parties, then perhaps it is best not to proceed with the agreement. On the other hand, a confidentiality agreement may be the best way to help develop the trust that is essential for two or more parties to build a productive working relationship. Second, an organization that enters into a confidentiality agreement must ensure that all of its members understand that they must keep sensitive information confidential.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• Confidentiality agreements are governed by contract law. Predictably enforced and fairly construed contract laws will greatly facilitate the formation and enforcement of contracts, especially confidentiality agreements.

For Senior Management (university president, R&D manager, etc)

• By keeping sensitive information confidential, it is possible to win and maintain the trust of partnering institutions and collaborating organizations. Confidentiality agreements are not, however, the mark of a “culture of secrecy.”
• An institution can establish and build its reputation (an intangible, but very valuable, asset) by holding up its end of the bargain in confidentiality agreements.

For Scientists

• Your institution’s technology transfer office can help you understand the concept of confidentiality, as well as what your obligations might be vis-à-vis confidentiality agreements.
• Keep track of data and information related to confidentiality agreements. Understand what can, and cannot, be disclosed, and to whom it can be disclosed. If you have questions, do not hesitate to contact your technology transfer office for guidance.

For Technology Transfer Officers

• A confidentiality agreement is frequently the first step in the process of creating a partnership. Consequently, it should be carefully drafted and implemented.
• Confidentiality agreements may be stand-alone documents or, as is often the case, part of another agreement (for example, a technology or patent license).
• Confidentiality agreements rely on a culture of trust, not a culture of secrecy. Therefore, maintain confidentiality pursuant to agreements, to advance your institution’s mission. However, do not stymie authorized dissemination of other information for the public good.