Illinois NDA Template
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An Illinois NDA, or “nondisclosure agreement,” is a legal agreement between two or more parties outlining which information should remain confidential. Startups and businesses often use NDAs to safeguard themselves in case employees or potential partners attempt to reveal sensitive company information. NDAs play a vital role in protecting your trade secrets and essential details, such as your business strategy or client contacts, from being exposed to competitors or the public.
Trade Secret Definition in Illinois
“Trade secret” means information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, or list of actual or potential customers or suppliers, that:
(1) is sufficiently secret to derive economic value, actual or potential, from not being generally known to other persons who can obtain economic value from its disclosure or use; and
(2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy or confidentiality. (Illinois Trade Secrets Act 765 ILCS 1065/2(d))
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Read on to learn more about Illinois NDAs, including:
What's included in a Illinois NDA?
Here are some key components that are typically included in a Illinois 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. Disclosing and Receiving Party
Within this section, the "disclosing party" refers to one who shares confidential information, while the "receiving party" is the one obtaining said information. This only applies to unilateral NDAs; mutual NDAs involve both parties as disclosers and receivers. Also, note the difference between "Company Name" and "individual." As an individual disclosing or receiving information in a personal capacity, simply use your own name.
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
It's essential to explicitly define what information you classify as "confidential" within your NDA. For example, imagine your employer states, "Every piece of information I share with you for the next 2 years is confidential." A year later, they mention that it might rain tomorrow. Later, you tell a mutual acquaintance about the rain prediction, which shouldn't be considered disclosing confidential material.
A court would not uphold a clause that is too vague or broad. However, if the definition is too narrow, you risk inadvertently sharing confidential information, which the receiving party could then freely disclose. Most businesses employ a standard definition, such as the one found in the NDA template. If you need guidance, consult our more comprehensive post regarding defining 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
An NDA must convey its purpose, which might be to develop a prototype product for the disclosing party or to evaluate a potential business relationship. The purpose matters because it outlines how the receiving party can use the information. For instance, suppose you're hiring a developer to create your website. You'd share your business plans, so they understand the type of site you need. In this scenario, the purpose may be described as developing specific website components. Without the restrictions of purpose, the developer might use the confidential information to establish a similar company and profit from your business's secrets.
Although in most instances, the template's language (“evaluating the parties’ capabilities of pursuing one or more business opportunities”) is appropriate, consider crafting a purpose definition that best suits your requirements.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
The utilization of confidential information relates directly to the NDA's purpose. This clause ensures that the information is used exclusively for the stated purpose. Picture an alternative scenario where someone exploits confidential details for malicious intent, and you'll see the necessity for this provision. Ultimately, it guarantees that sensitive discussions are private and shielded from outside factors which could negatively impact both parties.
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
In cases where the "Recipient" is a company or the recipient needs to consult a lawyer, the "Limited Access" section of the NDA steps in. For the most part, the language in the template works well. However, as a general rule, consider who requires access to the information and limit it to those individuals. Moreover, the recipient should ensure that anyone they disclose the information to signs an NDA with the same conditions.
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 following section of the NDA regards "exclusions," which are crucial for increasing the likelihood of a court upholding your NDA, if necessary. If you've already disclosed confidential information to the recipient, consider removing only 4(a)(1); otherwise, these exclusions are generally suitable for 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
Determine the timeframe that your NDA will be in effect. This could range from covering a single transaction lasting a few days to being indefinite. Depending on the anticipated duration of your relationship with the receiving party, the NDA should match that time period. Furthermore, it's common for an NDA to last longer than the specific transaction or relationship, reflecting the trade secret's continued secrecy.
You'll likely want to include a clause stating that the trade secret's protection extends beyond the termination of any associated business or contractual relationship. If unsure, a typical timeframe is between one to five years, and remember to ensure that the trade secret remains protected for as long as necessary.
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?
If you've inadvertently disclosed confidential intel to the other party, no worries. You'll need to slightly adjust the template to resolve the situation. Here how you can do that.
How do I protect my trade secret?
The mere justification for using NDAs is to protect your confidential data. But confidential specs by themselves aren't usually revealing -- they're integral to the trade secret puzzle. For the information to be of any value, it must qualify as a trade secret. If you're uncertain about what constitutes a trade secret, whether your information makes the cut, or how to effectively safeguard your trade secret, our guide on that topic might be of assistance.