THE ABC OF NDA’S

WHAT IS A CONFIDENTIALITY AGREEMENT? 

A confidentiality agreement is a legally binding contract between two or more parties in which at least one of the parties agrees not to disclose certain sensitive information. The name of this kind of an agreement may depend on the industry; they are often also called an NDA or non-disclosure agreement.

Most companies derive substantial value from their confidential information and data, both by having exclusive use of it in their own businesses and by sharing it selectively with customers, suppliers, and others. A confidentiality agreement is used by individuals or businesses to protect information, data, ideas, trade secrets, intellectual property, transaction details, and more from being revealed to a third-party during the course of a business deal, project, or employment agreement with another party.

In larger transactions or relationships, there are usually confidentiality clauses within an agreement, such as in an influencer agreement. If you want to prevent the receiving party from misusing your business contacts, you should include a non-circumvention clause or agreement.

WHAT IS THE PURPOSE OF A CONFIDENTIALITY AGREEMENT?

A confidentiality agreement is used to protect the disclosure of various types of information. Confidential information takes various forms in different businesses and industries, but it includes:

  • Customer information (any information relating to customers or clients, including client lists)
  • Employee and contractor lists and records
  • Supplier and vendor lists and information
  • Pricing and discount structuresfinancial budgets, projections
  • Marketing information (campaigns, projects, plans)
  • Business methods and operations
  • Intellectual property (IP) (including patents, trade secrets, trademarks, software, copyrights)
  • Recipes and chemical formulas and compositions
  • Blueprints, designs, and drawings
  • Terms of commercial contracts
  • Product and service information (production processes, procedures, packaging, equipment, and techniques used to produce a product or service)
  • Accounting information
  • Software algorithms and source code

WHEN SHOULD I USE A CONFIDENTIALITY AGREEMENT?

A confidentiality agreement is recommended as the first step in situations when an individual or business needs to disclose sensitive information in the context of specific business negotiations, such as:

  • When an employer wishes to keep company information protected while negotiating a position with a potential new hire
  • Evaluating or engaging a business or marketing consultant or agency
  • Considering an independent contractor or consultant for hire and the client wishes to keep some of the disclosed information private
  • Soliciting proposals from vendors and other service providers, which usually involves the exchange of pricing, strategies, personnel records, business methods, technical specifications, and other confidential information of both parties
  • During a pending company acquisition to keep the proposed terms of the agreement and company information private
  • When two or more businesses or individuals wish to begin working together (for example, a joint venture, merger, etc.) and the parties involved want to hold certain information discussed in negotiations in confidence

WHY IS IT NECESSARY TO HAVE WRITTEN CONFIDENTIALITY AGREEMENTS?

There are several reasons why parties should have a written confidentiality agreement, including

  • Avoiding confusion over what the parties consider to be confidential
  • Enforcing written contracts is easier than oral agreements
  • More flexibility in defining what is confidential
  • Demarcating treatment of confidential information between the parties
  • Ensuring protection of trade secrets, because in some jurisdictions this protection can be weakened or lost (deemed waived) if disclosed without a written agreement

WHAT TYPES OF CONFIDENTIALITY AGREEMENTS EXIST?

The three main types are 1) fully mutual confidentiality agreement, 2) unilateral confidentiality agreement and 3) reciprocal confidentiality agreement.

In the first situation, each party is both disclosing and receiving confidential information on a fully mutual basis. Each parties have the same set of rights, restrictions and obligations. An example could be where two companies form a strategic alliance. However, mutual confidentiality agreement can be used in transactions and relationships where the confidential information to be exchanged is not of equivalent kind or value.

In the second situation, only one party is disclosing confidential information. For example, where a consultant will have access to the client’s business information in the course of the service. The nondisclosure obligations and access and use restrictions will apply only to the party that is the recipient of confidential information but the operative provisions can be drafted to favor either party.

In the third situation, both parties are disclosing confidential information but not on a fully mutual basis. In that kind of an agreement, the scope and nature of the confidential information that each party will disclose is separately defined and their respective nondisclosure obligations and access and use restrictions may differ accordingly.

Many confidentiality agreements have similar structures and share key provisions, but there is still great variation in the form, structure, and substantive details that should be customized to the specific circumstances of each agreement.

WHAT ARE THE KEY PROVISIONS OF A CONFIDENTIALITY AGREEMENT?

While the form and structure of confidentiality agreements vary, they usually include at least the following provisions:

  • The persons or entities that are parties to the agreement
  • The business purpose of the agreement
  • The definition of confidential information
  • What is excluded from the definition of confidential information
  • All nondisclosure obligations
  • Any use and access restrictions
  • Any safekeeping and security requirements
  • Any provisions relating to the return or destruction of confidential information
  • The agreement’s term and the survival of nondisclosure obligation

In addition, condidentiality agreements usually have some boilerplate clauses such as an entire agreement clause.

WHEN SHOULD I SIGN A CONFIDENTIALITY AGREEMENT?

The parties should sign a confidentiality agreement as early as possible in their relationship, preferably before any confidential information is disclosed. If a party discloses information before signing the confidentiality agreement, it is important that the agreement specifically covers prior disclosures.

HOW LONG DOES A CONFIDENTIALITY AGREEMENT LAST?

The confidentiality agreement’s term is up to the persons who write the agreement. Confidentiality agreements can run indefinitely, covering the parties’ disclosures of confidential information at any time, or they can terminate on a certain date or event.

It is also possible to state that the rights and obligations (mostly, not disclosing the information received) shall survive the expiration or termination of the agreement for a period of time – the typical survival period ranges between one and five years.

5 Essential Provisions in Social Media Influencer Agreements

Every type of agreement has its own tricks and traps. The contract made between the advertiser/brand and influencer is a unique agreement. There are several issues you should pay attention to when you are signing one. One of the most obvious and top-priority provisions include the influencer’s services in detail and compensation. In this article, we will not talk about them but other things that should not be ignored.

Depending on whether you are an advertiser or an influencer, some of the other provisions are more important to you. Although in an excellent agreement there aren’t any unimportant clauses, some terms are always more central. In this article, we will share 5 clauses that we think should be carefully formulated in an influencer agreement.

LEGAL COMPLIANCE – WHO NEEDS TO FOLLOW THE LAWS?

Depending on the jurisdiction, the brand is also responsible for following the relevant regulation if the influencer does not. For example in Finland that is the case. In most jurisdictions, the advertiser has a duty to inform the influencer about the relevant legislation, such as consumer protection and marketing laws.

Falling foul of the relevant laws puts you on the risk for sanction and negative publicity. For example, in many jurisdictions, it has been made clear that using only the social media platform tool to mark commercial collaboration is not sufficient.

We recommend using a clause that requires the influencer to acknowledge and comply with the relevant laws, regulations and soft law instruments in your jurisdiction. It is good practice to include a written guidance that has the relevant legislation and guidelines that needs to be followed.

It is important to bear in mind that being in compliance with relevant legislation benefits both parties of the influencer agreement. In today’s world, ignoring legislative obligations and requirements in social media influencer marketing campaigns can be hazardous for both the influencer and the brand.

Consumers are fully aware of the sponsored content on social media and they don’t generally like if they see advertisement that is not clearly disclosed as such. Non-compliance with legislation affects negatively on the influencer’s and brand’s reputation. Making sure legal compliance is in the top priority for parties should, therefore, be highly important for both parties.

Do not forget to include writing about following the terms and conditions of each platform and not infringing others’ intellectual property rights.

If someone paid for your ticket to paradise, do not forget to disclose it.

CONFIDENTIALITY – WHO HAS TO BE HUSH-HUSH?

Social media influencer agreements often contain confidentiality provisions to protect sensitive information both parties may learn during the agreement’s term. For example, the brand might launch a new product or tell other sensitive information to the influencer. Often it’s also in the advertiser’s interest to keep the influencer from sharing the terms and conditions of the influencer marketing campaign.

It can also be that the influencer discloses to the brand something that they want to stay confidential, for example about their metrics. Quite often the writing of confidentiality provision is such that it only obligates the influencer. If two-way confidentiality is desired by the parties, pay special attention to the writing of this clause.

Usually, unless there is a large quantity of confidential information, a separate confidentiality agreement is not necessary to broaden the scope of the protection provided by a well-drafted confidentiality provision. On the other hand, a separate non-disclosure agreement might be needed if confidential information is shared during the negotiations before signing the final contract.

Remember to decide whether the confidentiality will survive expiration or termination of the agreement. Sometimes the confidentiality obligations should only survive for a certain period after termination of the contract, and if that’s the case, it should be clearly stated.

SCOPE AND OWNERSHIP OF INTELLECTUAL PROPERTY – WHO OWNS WHAT?

There is a lot of intellectual property (at least copyright and trademarks) related to the influencer agreement. The brand owns intellectual property, for example its’ trademarks. The influencer will usually be creating content for the brand and owns the copyright for that unless nothing else is agreed. Sometimes the influencer has trademarks, perhaps their own name is trademarked, and the brand can not use it without a license.

Therefore, negotiating the scope and ownership of intellectual property is a huge part of the deal. From the influencer’s point of view, assigning the copyright ownership of the content that has been created is not very alluring – unless the compensation is very good. The brands don’t often want to pay that much extra for owning the copyright. That’s why it’s quite usual to agree upon licensing the copyright to the brand.

From the brand’s point of view, the license should be as extensive as possible. It’s good to consider where they want to use the posts, photos and names: only “repost” on social media or also on other platforms, such as in print? Pay also attention to the time the license is valid.

Sometimes the brands forget to permit a license to their logo and other trademarks. From the influencer’s point of view, in that case, there is a risk that the brand could accuse the influencer of trademark infringement if something goes wrong. From the brand’s point of view, it is never good practice to allow anyone to use your trademarks and logo without a license.

EXCLUSIVITY – WHAT ELSE CAN BE PROMOTED?

Influencers are loved and respected for their authenticity. Part of that authentic image is engaging with several brands and products. Their followers value their opinions which is the point of using them in marketing campaigns and collaborations.

In the influencer’s interest is to be as unlimited as possible when it comes to choosing brands they work with. Of course, working with two or several competing brands from the same sector is not good for the influencer’s creditability either.

From the brand’s point of view, an influencer-led campaign may easily lose its effect if the influencer goes on to promote a competitor’s brand or products not long after. Many nasty disputes are caused because of not including an exclusivity provision in the contract. However, negotiating about exclusivity may be hard and expensive when dealing with the major influencers. Micro-influencers are more willing to agree on exclusivity.

It is good to say explicitly in the influencer agreement what is prohibited: name the direct competitors and define similar products or services. Don’t forget to set a time limit for this obligation.

When drafting an exclusivity clause, make sure it’s in compliance with relevant laws.

TERM AND TERMINATION – WHAT HAPPENS WHEN THE CAMPAIGN IS OVER?

Normally the relationship between the influencer and the brand is not meant to be eternal, and in any case, it never will be. Even if the co-operation is for longer time, there should still be provisions about the term and termination.

In the brand’s interest is to obtain strong termination rights for reputational damage, failure to comply with applicable legislation and breach of the terms of the agreement.

If the advertiser sets special success results, the influencer needs to be very careful that they understand what is actually expected from them. The measures of success need to be in clear writing.

One important thing to consider related to the termination is survival of other clauses in the contract. Which provisions shall still apply after the termination? Think especially confidentiality, exclusivity and ownership of the IP.

HOW CAN VEDINOR HELP YOU?

If you are dealing with influencer campaigns and need help with contracts, we are more than happy to assist and advise you. We bring to the table the following combination: our profound understanding of this unique form of marketing, an in-depth understanding of social media and how different platforms work, and a sound legal experience. If you are interested in our influencer marketing related services, please schedule a free consultation, email us at communications@vedinor.com or reach out to our Partner, Legal Counsel Anne Nyström directly.