Non-Disclosure Agreement- Importance of…

Hello there my great minds! Our #LegalBusiness series continues
In our previous post, we saw how Joseph’s company Bionic Don Limited was slammed with a fine of N2 million for infringement of Becky’s company trademark.

Paying the fine from the lawsuit dug a hole in Joseph’s finances and he had to work extra hard to cover his losses.

It came as a relief when he happened upon an opportunity to submit a proposal to handle a major marketing campaign for one of the major pharmaceutical companies. Joseph usually subcontracted the design aspect of his work to a graphic design company owned by one of his friends Tunde and he worked closely with Tunde in preparing the brief for this job. Unknown to him, Tunde had also been contracted by a competitor agency named BYC Limited to work on their own proposal to bid for the same job that Joseph was chasing.

While working with Tunde, Joseph had to reveal to him one of his unique marketing techniques that had to be incorporated into the designs that Tunde was working on. Eventually Joseph submitted his proposal but he was not selected by the company to handle the campaign.

Joseph was disappointed. He later learnt that BYC Ltd had gotten the job and their campaign went viral. He felt even worse on seeing their campaign and noticing that his creative idea had been used and wondered how they had gotten access to it. He confronted Tunde about this who initially denied but later admitted that he had worked on BYC’s proposal while working on Joseph’s proposal and had used Joseph’s unique creative idea for BYC Ltd. He said he had done this because BYC had paid him more than Joseph and he wanted to secure their patronage.

BYC made a lot of money from this contract and the new account gave a significant boost to their corporate profile.

Joseph lost out big time… And there was nothing he could do about it.

Case Analysis

Are you like Joseph? In the course of your business do you find that you have to share your trade secret with your business partners (suppliers, vendors, sub contractors, consultants, etc.) Do you do this without covering your back? You need to learn lessons from Joseph’s case and start protecting your ideas and sensitive business information.

What can I do?

One of the best ways to protect your sensitive business information is by preparing a Non-disclosure Agreement (NDA). This can also be called a Confidential Agreement or Confidentiality Statement. The terms of this agreement prohibits the other party from divulging your business information to your competitors or any other external parties.

Once a person signs a Non-disclosure agreement, he becomes legally bound to keep it a secret for a certain period (usually stated in the contract and ranging from 2 to 5 years). If breached, the person can be sued for damages or made to pay back lost profits.

Like I always advise, it is better you consult a legal practitioner to draft legal contracts between you and your business partners and to also help review contacts given to you before you sign.

Thanks for reading… you are awesome!


Published by Ronke Omorodion

I am a Legal Practitioner/Consultant. I inform entrepreneurs of the legal implications of doing business and help them build a structured legally sound business.

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