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Why A Non-Disclosure Agreement Won’t Protect You (And What Will)

Non-disclosure agreements (NDAs) are a standard part of doing business. They are designed to provide legal recourse when someone shares your confidential information they’ve agreed not to share. The problem is, you can’t enforce an NDA if you don’t keep tabs on what people are up to after signing them.

While you can’t babysit everyone, there are precautions you can take to decrease the likelihood of someone violating your NDA agreement. Here’s how:

  1. Understand that a piece of paper is inherently meaningless

A piece of paper isn’t a guaranteed protection. The truth is, someone’s signed word is only as good as their intentions.

Contracts are broken all the time, and NDAs are no exception. With litigation costing money, it can be expensive to pursue a broken contract. While you should always have your contacts sign an NDA when appropriate, understand that their signature alone is not a guarantee they will honor their word.

How you develop your relationships with people who sign your NDA is the only reliable way to encourage someone to keep their word.

  1. Focus on developing strong bonds with clear expectations

If you need to disclose information during negotiations for a business deal, you need a strong NDA to back you up. However, more importantly, you need to have already set the tone for the way you do business.

Instead of relying on a thin piece of paper to protect you, work on developing strong, professional bonds with everyone you meet, even if you don’t do business with them. You need to develop a reputation as someone who takes all aspects of their business seriously.

In all of your words, actions, and mannerisms, make it clear you mean business. Don’t give anyone a reason to believe you’re a pushover, or that you’re casual about doing business.

Trade secrets are extremely vulnerable

What exactly is a trade secret? It’s information not known to all. Generally, it’s secret information pertaining to your business limited to a few people. It can’t be registered like a copyright because that would make the information public.

Despite having no registration process, trade secrets are inherently protected, provided they meet certain criteria and you can prove they are secrets.

Trade secret expert Robert Klinck explains, “Trade secret law protects information with commercial value, including formulas, patterns, compilations, programs, devices, methods, techniques, or processes. Classic examples of a trade secret include a customer list or a commercially valuable recipe (e.g., Coca-cola’s cola recipe).”

He further explains, “To be a trade secret, information does not need to be strictly novel. It does, however, need some “modicum of originality” such that it is beyond everyday knowledge.”

Trade secrets are vulnerable because once they’re made public, they lose their protected status as a trade secret. This means once someone violates your trade secrets, you can’t pursue any further claims in court.

  1. Track everyone who signs your NDA

Keep a list of everyone who signs your NDA so you can reference it, should the need arise. For instance, imagine that someone comes out with a new product that seems eerily similar to what you’ve been creating. You can get a list of everyone involved with the company and compare it to your list of signatures. If anyone on your list is remotely connected to someone from that company, you might have a case. Only a skilled lawyer can determine that, though.

  1. Be meticulous about how your NDA is worded

As previously discussed, your NDA is more of an insurance policy to use after someone violates the agreement. Your wording needs to be specific, accurate, and bulletproof. Don’t create your own NDA or download one from the internet. Hire a professional lawyer to handcraft one specifically tailored for your needs. It’s the only way to reduce the risk of having your case thrown out on a technicality of ambiguity or clauses that aren’t legal.

  1. Disclose information sparingly

Don’t be so quick to put an NDA in front of people you’re considering doing business with. Take your time to wine and dine them; get to know what their intentions are.

Disclosing sensitive information too early in the game can be damaging. Only disclose information on a need-to-know basis, and disclose as little as possible.