Pennsylvania NDA Template
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A Pennsylvania NDA, or “nondisclosure agreement,” is a legal safeguard used by two or more parties to specify which pieces of information should be kept confidential. Frequently utilized by startups and established businesses alike, NDAs serve as a preventative measure against the unwanted disclosure of confidential data by employees, potential business collaborators, or others with access to sensitive information. These vital contracts play a key role in safeguarding your business's trade secrets and other critical details such as your business strategy or client contacts, keeping them firmly out of the public eye and safe from competitors.
Trade Secret Definition in Pennsylvania
“Trade secret.” Information, including a formula, drawing, pattern, compilation including a customer list, program, device, method, technique or process that:
(1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Pennsylvania Uniform Trade Secrets Act § 5302)
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Read on to learn more about Pennsylvania NDAs, including:
What's included in a Pennsylvania NDA?
Here are some key components that are typically included in a Pennsylvania 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
In Pennsylvania, a Non-Disclosure Agreement (NDA) involves two main roles: the disclosing party - the individual or entity sharing their knowledge, and the obtaining party - the person or group on the receiving end of this knowledge. A point of importance is this refers solely to one-way NDAs; for mutual NDAs, each party plays dual roles. If you are an individual, simply use your name instead of a company name, assuming 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
When constructing your NDA, it's essential to detail which information counts as "confidential". Picture this: an employer insists that every tidbit they share with you over two years is confidential. Fast forward a year and you're planning to resign. Your employer casually mentions that it might rain tomorrow. Later that evening, you inform your mutual acquaintance of the expected rain. Now, can this be considered a breach of confidentiality? Absolutely not!
However, it's essential to strike a balance. An overly broad confidentiality clause is unlikely to hold up in court. Conversely, a too narrow definition might lead to unintended disclosure of confidential information, which the obtaining party is then free to share. A standard definition, such as the one in our template, often suffices. Still, if you are unsure, a more comprehensive post on defining confidential information in your NDA is available.
“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
Regardless of the form your NDA takes, it will require a clearly outlined "purpose". Possible goals could vary: from "developing a prototype for the disclosing party" to "exploring the potential of a business relationship between the parties". Highlighting the purpose proves vital as it sets the boundaries for how the obtaining party can use the information.
Consider this scenario: you hire a developer to build your new website. To have them understand your business better for their work, you share your business plans. It would be prudent then to specify the purpose of the NDA to be directly tied to the "development of..." followed by a detailed description of the website parts that they will develop. Without this purpose delineation, there would be nothing stopping the developer from exploiting the confidential information to set up a rival company, profiting from your confidential details. However, in most situations, the template language stating "evaluating the parties' capabilities of exploring one or more business opportunities" should work fine.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
How the confidential information is used ties directly to the reasons for signing the NDA. This provision effectively limits the use of the confidential information to the agreed purpose. You might think this is stating the obvious, yet consider instances where parties might manipulate the confidential details to exploit your company. This provision safeguards sensitive talks, ensuring both parties are shielded from potential harm.
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
Imagine you're offering your information to the "Recipient," but what if the "Recipient" is a company, or needs to share some information with their legal consultant? These scenarios are catered for in the "Limited Access" realm of your NDA.
In most situations, the template language suffices. General rule of thumb though: consider who needs access to the information, and restrict the information to this circle. If the recipient shares with another party, they need to ensure that this new party signs an NDA agreeing to the same 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
In any NDA, it’s essential to consider "exclusions," or the things the NDA doesn’t cover. Including these exclusions enhances the likelihood that your NDA would be upheld by a court (if the need arises). There's just one item you might want to remove, 4(a)(1), but only if confidential information has already been disclosed to the recipient. In most cases, though, the existing exclusions should be adequate.
(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 aspect refers to the length of time during which the NDA is binding. The NDA could last for a short-lived transaction, or it could be indefinite. The key lies in determining a duration that suits the foreseen relationship or agreement. Usually, an NDA outlives the specific transaction or connection it is set up for, often as long as the information remains confidential.
Of course, you'd want to include a condition that insists on the continued protection of the trade secret even after the termination of a business relationship or contractual agreement. If you're unsure about this term, bear in mind that the typical NDA term spans between one to five years. The term you choose should adequately cover the length of time you need the information 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?
If you've mistakenly shared confidential information before signing an NDA, don't panic! We've got your back. You can amend the template to suit your requirements. We'll show you exactly how to do this.
How do I protect my trade secret?
The crux of using NDAs is protecting your sensitive information. However, it's only part of the puzzle; to add value, your data must qualify as a trade secret. If you're uncertain about what constitutes a trade secret, how to determine whether your data qualifies, or the right way to protect your trade secret, check out our comprehensive guide on this topic.