Confidentiality or Non-Disclosure Agreements
General Advice For Faculty And Other NC STATE Personnel
Concerning "Confidentiality," "Secrecy," And/Or "Non-Disclosure" Agreements
Occasionally, University personnel are requested or required to execute what are generically referred to as confidentiality agreements in order to gain access to a third party's facilities, proprietary information, or both. When this happens, there are several factors that should be considered:
Is the Agreement with NC STATE?
- If the agreement is between an outside entity and the university itself, only an authorized university representative may sign it. To be authorized, the individual must have received a written delegation of authority. Any confidentiality agreement necessary for the negotiation of a research agreement or operation of the university's technology transfer program requiring a university signature should be submitted to the Office of Technology Transfer, Box 8210, for review and approval.
- Any other confidentiality agreement requiring a university signature should be submitted to Purchasing, Box 7212, for review and approval.
- If you have questions about where to send a confidentiality agreement for signature call the Office of General Counsel.
- Generally, if the information which is to be exchanged is to be used in the recipient's university research or other official university projects, the agreement should be with the university, and not with the university researcher/employee as an individual. There may be exceptions to this, and you should discuss such situations with your Associate Dean for Research.
Is the Agreement with an Individual?
- If the agreement is between the outside entity and an individual university employee, the guidelines set out below should be helpful. Note that in situations where the confidentiality agreement is with an individual, the university's name should not be used at all, except where necessary to indicate the individual's place of employment. Nothing in the agreement should state or imply that the university is in any way a party to, or bound by the agreement.
- Do you really need the confidential information? These agreements are clearly enforceable and most companies are extremely serious about protecting their confidential information (sometimes referred to as "trade secrets"). Once you have signed the agreement and received the information, you are bound by the secrecy provisions of the agreement and will not be able to use the information in your scholarly activities at NC STATE without permission from the company.
- If you decide to sign, here some items to consider in negotiating with the company with regard to the confidentiality agreement:
- The agreement should be for a relatively short time period; three (3) years is typical; a confidentiality period of more than five (5) years should be resisted.
- The university employee should take care to have a clear demarcation between his/her university-based project(s) and the project to which the confidentiality agreement applies. At a minimum, the confidentiality agreement should designate the full title of the project to which the agreement applies, and should contain a good description of the project.
These confidentiality agreements are enforceable and companies take them seriously. A breach of confidentiality could result in huge damages. The university employee needs to be certain that there will be no chance for the confidential information to find its way into his/her university work.
- The agreement should require the disclosing entity to identify any information that it deems to be confidential with a mark or legend such as "confidential" or "proprietary" at the time of disclosure. The agreement should require that orally disclosed confidential information be reduced to writing within a short time (e.g. 30 days) from the date of disclosure.
- There are generally accepted exceptions to what may be accorded confidential treatment. These should be specifically listed in the confidentiality agreement. The following are typical of such standard exceptions:
- is already known to the recipient or the public at the time of the disclosure;
- becomes publicly known without the wrongful act or breach of the confidentiality agreement by the recipient; and,
- is rightfully received by the recipient from a third party on a non-confidential basis.
- The confidentiality agreement should not purport to transfer any of the university employee's intellectual property rights (i.e., patents, copyrights, etc.) to the other party. Doing so would likely lead to a conflict with the employee's obligations to NC STATE under the university's patent and copyright policies.
- The NC STATE employee should strongly resist making any promise to indemnify or "hold harmless" the other party. Such a promise makes the promisor the insurer of the other party and leaves the promisor vulnerable to unlimited liability, often regardless of fault. The one promising to indemnify and hold the other harmless also becomes responsible for providing and paying for the other party's legal counsel should the other party get involved in litigation as a result of the confidentiality agreement or its performance.
- The employee should also be aware that clauses requiring resolution of disputes in a certain location are enforceable, and may result in a severe disadvantage to the individual who is forced to litigate outside North Carolina. The obvious disadvantages are the greatly increased cost and inconvenience of having to litigate in a far-off location.
NOTE: This information is general in nature, having no reference to any specific situation. It is considered accurate. However, in issuing this document, neither NC STATE, its Office of General Counsel, nor any employee thereof is rendering legal services. If legal advice or other expert assistance is required by any individual being asked to sign a confidentiality agreement in his/her individual capacity, the services of a competent professional should be sought.