Alabama NDA Template
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An Alabama NDA, or “nondisclosure agreement,” is a legal agreement between two or more parties outlining the information that must remain confidential. These agreements are commonly utilized by startups and businesses for added protection in the event that employees, potential business partners, and others attempt to disclose sensitive information. By implementing an NDA, you are safeguarding your company's trade secrets and valuable data, such as business strategies or client contact lists, from being exposed to the public or competitors.
Trade Secret Definition in Alabama
A “trade secret” is information that:
- Is used or intended for use in a trade or business;
- Is included or embodied in a formula, pattern, compilation, computer software, drawing, device, method, technique, or process;
- Is not publicly known and is not generally known in the trade or business of the person asserting that it is a trade secret;
- Cannot be readily ascertained or derived from publicly available information;
- Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy; and
- Has significant economic value. (Alabama Trade Secrets Act § 8-27-2(1))
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Read on to learn more about Alabama NDAs, including:
What's included in a Alabama NDA?
Here are some key components that are typically included in a Alabama Nondisclosure Agreement:
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Disclosing and Receiving Party
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Definition of Confidential Information
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NDA Purpose
- Use of Confidential Information
- Limited Access to Confidential Information
- Exclusions - What's not Covered
- Term of Confidentiality Period
1. Identifying the Parties Involved
In this section, the disclosing party is the one that's "sharing" the confidential information. The counterpart, the receiving party, is the entity receiving the confidential information. This only applies for one-way NDAs -- for two-way NDAs, both parties are technically sharing and receiving. Take note of the difference between "Company Name" and "individual" -- if you're a single person either sharing or receiving the information, just use your name (as you don't own a company).
This nondisclosure agreement (this “Agreement”) is dated [Date] (the “Effective Date”) and is between [Company Name of Disclosing Party; e.g. “Max Studios, LLC”; if you do not have a formal legal entity, use your legal name, e.g. “Max Smith”], (the “Company”), and [Company Name of Receiving Party; if receiving party does not have a formal legal entity, use their legal name] (the “Recipient”).
2. Definition of Confidential Information
With your NDA, you need to establish what you’re recognizing as “confidential.” The rationale is straightforward -- think about a boss saying, “Everything I communicate to you in the next 2 years is confidential.” A year later, you’re leaving the job and your boss makes a remark about expecting it to rain tomorrow. Your boss finds out that later that evening, you advised your mutual acquaintance that it’s likely to rain tomorrow. Did you reveal confidential information? Obviously not!
No court would maintain such a sweeping confidentiality clause. Yet, if you draft the definition too narrowly, you could unintentionally reveal confidential details that the receiving party would then be free to share with everyone.
Most enterprises incorporate a standard definition like the one in the provided template, but if you’re uncertain, check out our detailed post about nailing the definition of confidential information in your NDA.
“Confidential Information” means any information that is proprietary or unique to the Company and that is disclosed by the Company to the Recipient during the term of this Agreement, including the following: trade secret information; matters of a technical nature such as processes, devices, techniques, data and formulas, research subjects and results; marketing methods; plans and strategies; information about operations, products, services, revenues, expenses, profits, sales, key personnel, customers, suppliers, and pricing policies; and any information concerning the marketing and other business affairs and methods of the Company which is not readily available to the public. “Confidential Information” also includes information of others that (1) is disclosed under this Agreement, (2) the Company is obligated to protect from disclosure or restricted from using or both, and (3) that would constitute “Confidential Information” if the information belonged to the Company.
3. NDA Purpose
You’ll notice in the provided template -- and in all NDAs -- that you need to mention the “intention” of the NDA. You might write something like, “to manufacture a prototype product for the sharing party,” or “to analyze the potential collaboration between the two parties.” The intention is crucial as it signifies why the recipient of the confidential details can use the information.
For instance, let’s say you wish to hire a developer to assist you in building your website. You share with him your venture plans to give him a clear idea of the sort of website to create. You’d want to limit the intention in this scenario to be in relation with the “creation of. . .” and then detail the specific sections of the website the developer will be constructing.
Without constraining that intention, the developer might exploit the confidential data to establish a separate, similar business and profit from your venture’s confidential details. Generally, however, the template's language (about evaluating the parties' capabilities for pursuing business opportunities) should suffice.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
The way you deploy your confidential information is related to the intention behind signing the NDA. This clause essentially states that you'll only utilize the confidential information for that purpose. This may seem evident, but consider a different scenario where someone is exploiting the confidential data to undermine the business. This provision provides assurance that sensitive conversations will remain private, sheltering both parties from potential external threats or damage.
The Recipient shall use Confidential Information only for the Purpose. Unless otherwise agreed in writing, neither party shall disclose to a third party the fact that discussions or negotiations are taking place concerning the Purpose or any of the terms or other facts relating to the Purpose, including the status of negotiations between the parties.
5. Limited Access to Confidential Information
You’re providing your information to the “Recipient,” but what if the Recipient is actually a corporation? Or what if the recipient has to consult certain information with his attorney? These sorts of matters are tackled in the “Restricted Access” segment of your NDA.
Mostly, the language in the template should suffice. Yet, generally, consider who needs to know the data, and restrict the use of the data to those individuals. Whomever the recipient shares the data with, the recipient should make sure that person also signs an NDA agreeing to identical terms.
The Recipient shall protect the Confidential Information from unauthorized use and disclosure using the same degree of care that it uses with respect to its own information of like importance, but no less than a reasonable degree of care. The Recipient shall retain the Confidential Information in confidence and shall not disclose Confidential Information to any third party without the Company’s prior written consent. However, the Recipient may disclose the Confidential Information to employees, contractors, consultants, and authorized representatives of the Recipient who (1) require access to the information for the Purpose, (2) are informed by the Recipient of the Recipient’s obligations under this Agreement, and (3) are bound by contract or fiduciary duty to obligations of confidentiality and use restrictions with substantially similar function, purpose, scope, and effect to those of this Agreement and that are at least as protective of the Confidential Information as this Agreement.
6. Exclusions - What's not Covered
The subsequent NDA segment is “exemptions.” You need these exemptions to enhance the chances of your NDA being reinforced by a court (should it ever come to that). The only one you might consider removing is 4(a)(1) -- and only if you’ve previously shared confidential information with the recipient. Otherwise, these exemptions as mentioned should apply in most situations.
(a) This Agreement imposes no obligations upon the Recipient with respect to Confidential Information that: (1) was known to the Recipient before disclosure by the Company as evidenced by contemporaneous records; (2) has become publicly available through no fault of the Recipient; (3) is disclosed to the Recipient by a third party that has the right to make the disclosure to the Recipient and that does not have any obligation of confidentiality with respect to the Confidential Information; or (4) is disclosed by the Recipient with the Company’s prior written consent.
(b) If the Recipient is required by any governmental agency, court, or other judicial or regulatory body to provide any Confidential Information received under this Agreement, then the Recipient will not be deemed to be in violation of this Agreement for the disclosure if the Recipient promptly gives written notice to the Company of the requirement to provide the Confidential Information and cooperates with the Company so that the Company may contest the requirement to provide the Confidential Information. The Recipient may disclose only that portion of the Confidential Information that it is legally required to furnish.
7. Term of Confidentiality Period
This provision frames the duration or time limit for which the NDA is operative. The NDA could merely cover a single transaction lasting few days, or you might want it to last eternally. Whatever time frame covers the predicted interaction, that's how long the agreement lasts. Frequently an NDA lasts longer than the specific transaction or relationship itself, especially for as long as the trade secret stays secret.
You probably should include a clause that specifically states that the trade secret must be kept protected even after a business relation or other contractual agreement has ended. If you're uncertain what to include here, remember that the usual time period ranges between one to five years. Also keep in mind that the time should last as long as you need the data to stay confidential.
This Agreement will continue for a period of one year from the Effective Date unless: (1) terminated earlier by either party upon written notice to the other; (2) extended by the mutual written agreement of the parties; or (3) superseded by a subsequent written agreement that explicitly sets forth the obligations of the parties with respect to Confidential Information. With respect to business information, the Recipient’s obligations of confidentiality and non-use under this Agreement will expire three years from the termination of this Agreement. With respect to all information that constitutes a trade secret, the Recipient’s obligations of confidentiality and non-use under this Agreement will survive the termination of this Agreement for as long as such information remains a trade secret under applicable law.
What happens if I've already disclosed confidential information?
Let's say you've already given confidential information to the other party - not an issue! We can help you manage this. You'll need to adjust the template in a few places, and we'll explain how to do so.
How do I protect my trade secret?
Your use of NDAs serves one main purpose: to protect your confidential information. But bear in mind, confidential information alone isn't worthwhile -- it's ultimately part of the trade secret formula. To be valuable, it has to meet the qualifications of a trade secret. If you're unsure what qualifies as a trade secret, how to correctly safeguard your trade secret, don't worry - we've got you covered. We encourage you to check our guide on that topic.