Whether you are the independent contractor or the hiring party, it is vital to pay attention to the following terms before executing an independent contractor non-disclosure agreement.
How these two terms are defined will dictate the entire agreement. It’s crucial for both parties to have a firm grasp of these definitions upfront so that there is no confusion down the road as to what information must be kept confidential. “Confidential information” is often defined as information that is generally not known to the public and which the disclosing party seeks to keep private. The definition will be followed by a non-exclusive list of examples of things that could potentially be confidential information, and it is important to read these examples.
“Trade secrets” has a similar definition, but applies to information and techniques developed by the disclosing party. Since almost anything could potentially be considered confidential information or trade secrets, as mentioned here by the Association of Corporate Counsel (ACC), it’s important for the independent contractor to realize whenever he or she is dealing with someone that isn’t privy to such information and to refrain from divulging any information that isn’t public knowledge. Furthermore, things can get tricky when it becomes necessary to disclose only certain information in order to carry on business. The best rule of thumb is to ask the disclosing party whenever the independent contractor is in doubt and get the answer in writing.
NDAs often vary the rights the independent contractor has over intellectual property that he or she creates for the other party. Depending on the type of work involved, the independent contractor will have different ownership rights. For instance, if the independent contractor is hired to work on one part of a collective work, such as a scriptwriter for a movie production, then the independent contractor usually won’t have any copyrights over the movie as a whole unless it’s negotiated upfront.
However, if an independent contractor is commissioned to create an original work of art, such as a painting or song, the contractor will likely retain the copyrights. Pay attention to whether the independent contractor is required to assign any copyrights they do obtain to the hiring party. This may be an important point to negotiate.
If the independent contractor is relying on the confidential information and trade secrets divulged in order to form his or her own business plans, it’s important to note whether the NDA includes a provision where the disclosing party is waiving all warranties as to the accuracy of the information and how they plan to use it in the future. If the disclosing party has made important verbal representations about its confidential information that the independent contractor is relying on, it is probably a good idea to make sure these representations are not being waived in the agreement.
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