Protecting your company’s IP (intellectual property) can be a daunting legal challenge for small business owners, but an experienced Florida small business attorney can help.

If you own a business in this state, you may need to have your employees, your potential investors, and others you work with sign a non-disclosure agreement – particularly if your business owns customer lists or trade secrets that may have value to others.

Are non-disclosure agreements legal in Florida? What can – and can’t – be included in a non-disclosure agreement? How can a business attorney help? Keep reading, because you are about to learn the answers to these questions and more about non-disclosure agreements in Florida.

WHAT IS YOUR MOST VALUABLE BUSINESS ASSET?

As a business owner, your IP may be your company’s most valuable asset. Several situations will require you to provide access to that intellectual property to an employee, contractor, investor, or another company. Many businesses in Florida use non-disclosure agreements to protect their IP.

In a general sense, a non-disclosure agreement should be signed whenever you share your company’s intellectual property and you do not want the other party to steal it or share it without your consent.

WHEN IS A NON-DISCLOSURE AGREEMENT APPROPRIATE?

When an employee will have access to the company’s intellectual property, a non-disclosure agreement should be signed when that person is hired or when that person is promoted to a position that requires access to the IP.

You’ve put considerable time, money, and work into your business. Your trade secrets, business agreements, proprietary processes, and client lists must be protected from any employee who might consider using your own intellectual property to start a business and compete against you.

A Florida business lawyer can draft a non-disclosure agreement that meets your precise business needs. Do not download one of the blank forms available online – it might not be enforceable in this state, and it cannot satisfy your company’s unique, specific needs.

SHOULD PARTNERS AND INVESTORS SIGN NON-DISCLOSURE AGREEMENTS?

If your business takes on an investor or a new partner, you will probably have to disclose much or all of your company’s sensitive information. Having a prospective investor or partner sign a non-disclosure agreement will protect that information.

If you are seeking an investor for a startup, you need to know that most venture capital investors will not sign a non-disclosure agreement.

SHOULD A PROSPECTIVE BUYER SIGN A NON-DISCLOSURE AGREEMENT?

In the future, if you decide to consider acquisition or buy-out offers, you will have to disclose all of your financial and operational details to the prospective buyer. You will need a non-disclosure agreement in case a prospective buyer backs out before the transaction is finalized.

A larger company can arrange an acquisition or a buy-out by working with a broker who ensures a buyer’s ability to follow through on the transaction – before the company releases any sensitive information – but small businesses may not want to pay a broker’s fee and will need protection.

The situations described above are not necessarily the only situations where you may have to share your company’s intellectual property. Over time, suppliers, manufacturers, and contractors may need access to some or all of your sensitive information for any number of reasons.

EXACTLY WHAT SHOULD A NON-DISCLOSURE AGREEMENT PROVIDE?

A strong, enforceable non-disclosure agreement must have these four provisions. It must:

  1. Define the confidential information that may not be disclosed: A Florida court probably won’t enforce vague, broadly defined non-disclosure provisions. Clearly and precisely defining the extent of the intellectual property makes the agreement more enforceable.
  2. Specify a time limit for the agreement: The courts rarely consider a non-disclosure agreement appropriate unless a time limit is specified. A reasonable length of time for an agreement will depend on your company’s own unique circumstances.
  3. Spell out any obligation to destroy or return IP: If originals or copies of intellectual property are to be destroyed or returned, the non-disclosure agreement must spell out that process. Vague references to returning or destroying intellectual property are not enough.
  4. Describe the remedies for the breach of the agreement: The remedies for a breach should be straightforwardly described and proportional to the damage sustained by the non-breaching party. An excessively harsh remedy may not be legally enforceable.

WHAT DOES A NON-DISCLOSURE AGREEMENT REQUIRE?

It’s also important to understand that in a general sense, a non-disclosure agreement is a restraint on trade. The courts in Florida enforce non-disclosure agreements only when the agreements are properly drafted with narrow, exacting legal terms and definitions.

Always have a non-disclosure agreement signed when you share any of your company’s intellectual property. A small business lawyer can draft non-disclosure agreements that meet Florida’s legal requirements and that Florida courts, if necessary, will enforce.

If you are a business owner, and if you have not yet done so, it’s a good idea to take an inventory of the business to determine what intellectual property needs to be protected and what value this information brings to your operations.

WHAT ARE THE LEGAL RIGHTS OF INTELLECTUAL PROPERTY OWNERS?

The protections offered by the law to the owners of intellectual property are designed to provide businesses with commercial and economic benefits, so business owners should take advantage of these legal protections.

If your intellectual property has been disclosed or stolen, you have the right to bring a legal action against anyone who has violated a non-disclosure agreement. If there is a breach of contract, the contract itself then serves as a guide for the court to decide upon a just resolution.

Even when both parties to a non-disclosure agreement have built trust, a non-disclosure agreement ensures that the obligations specified by the contract will be fulfilled – or that remedies will be imposed.

WHEN IS A NON-DISCLOSURE AGREEMENT UNENFORCEABLE?

The courts in Florida consider the most reasonable, plainest meaning of the text in a non-disclosure agreement. When the language is vague or ambivalent, the court may determine that the agreement is unenforceable.

An experienced Florida small business attorney can help you draft the non-disclosure agreements that are right for your business and can also represent your business in the event that a non-disclosure agreement is breached.

If you are a business owner and you do not already work closely with a reliable business lawyer, don’t wait. If your intellectual property does not have the comprehensive legal protection that it needs, speak to an experienced business attorney – today – and get the protection you need.