Businesses negotiate contracts for a variety of different purposes. Contracts lock in talent and vendor arrangements. They help companies ensure they have the materials they need for consistent production and facilities that they can use for business purposes.
Contracts can also play an important role in protecting intellectual property, especially trade secrets. Businesses typically cannot register trade secrets, so they need to find alternative means of protecting non-public information that gives the company a competitive advantage.
The contracts that a business negotiates with workers, vendors and service providers can potentially help protect the organization’s trade secrets from dissemination.
The right contract terms can prove invaluable
The terms of a business contract often focus on what each party commits to doing for the other. Contracts lock in compensation and job performance expectations. They provide explanations about delivery schedules and standards for outsourced services.
Contracts can also include restrictive covenants. Both non-compete agreements and non-disclosure agreements can help protect a company’s trade secrets. By imposing restrictions on future economic activities, businesses can prevent workers or service providers from taking what they learn about a company’s operations and using that information to start a competing business.
Non-disclosure agreements can prevent employees, vendors and service providers from sharing non-public information about a company, including its trade secrets. Restrictive covenants that include penalty clauses give organizations an opportunity to hold others accountable for disseminating non-public information that they learn due to their relationship with the organization.
Integrating the right terms into commercial contracts and proactively enforcing those terms can help organizations protect their valuable trade secrets. Restrictive covenants can prove invaluable for organizations that rely on trade secrets to remain competitive.