Colorado NDA Template
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A Colorado NDA, or “nondisclosure agreement,” can be thought of as a secret-keeping pact between two or more entities. Now, why should an entrepreneur like yourself care about it? Well, it's your security blanket when it comes to protecting valuable business information that might get into the wrong hands.
Consider this: you hire new employees, brainstorm collaborations with potential business partners, but in the midst of all this, you're sharing a lot about your business internals. What if they turn around and start sharing those details loosely? That's not a risk worth taking, right?
This is where your NDA steps in. It’s like your business’s loyal gatekeeper, ensuring your trade secrets and other confidential components are safe and sound. Whether it's your winning business strategy, your coveted client contacts, or any other crucial intel - an NDA ensures they remain private and away from prying eyes, be it your competitors or the public.
Simple rule of thumb: What's said in the business stays in the business, and an NDA helps ensure just that!
Trade Secret Definition in Colorado
“Trade secret” means the whole or any portion or phase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value. To be a “trade secret” the owner thereof must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes. (Colorado Uniform Trade Secrets Act C.R.S. § 7-74-102(4))
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Read on to learn more about Colorado NDAs, including:
What's included in a Colorado NDA?
Here are some key components that are typically included in a Colorado 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
Disclosing and receiving parties play crucial roles in non-disclosure agreements (NDAs). The 'disclosing party' refers to the entity sharing confidential data, while the 'receiving party' stands for the one getting it. Fairly simple, isn't it? However, it's essential to remember that this only pertains to unilateral NDAs. In the case of mutual NDAs, both parties simultaneously hold the roles of discloser and receiver.
Also, it's worth keeping in mind the difference between 'individual' and 'Company Name'. If you, as an individual, are involved in sharing or receiving confidential information, you should use your name directly, especially if you don't have 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
Ever wondered what makes information 'confidential'? Well, in the world of NDAs, it's imperative to clearly define 'confidential information'. Picture this - you're an employee, and your boss declares, “Everything I tell you in the next 2 years is confidential.” Naggingly, exactly a year later, you decide to quit, and on the day you leave, your boss comments, “I think it will rain tomorrow.” You casually mention this to a mutual friend, and your boss discovers it. So, have you breached confidentiality? Of course not!
If there's one thing to learn here, it's that courts will never uphold such a broad confidentiality clause. However, defining confidential information too narrowly can also lead the involved parties into a risky situation. It might inadvertently lead to the disclosure of sensitive information that could end up in the public domain.
Although many businesses adopt a standard definition like the one provided in our template, it's always a good idea to know exactly what you're putting on the table. If you are unsure, head to our in-depth guide on the subject.
“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 integral part of NDAs, often overlooked, is their 'purpose'. It's important to put concise wording into this part of the agreement. For instance, the purpose might be “to produce a prototype product for the disclosing party” or “to evaluate the prospective commercial relationship between the parties.”
The purpose serves as a careful reminder of how and why the recipient can use confidential information. Imagine hiring a developer to construct your website. As part of the job, you share your business ideals, so they have a better grasp of the kind of website required. In such a scenario, it would be wise to limit the purpose to the “development of...” and detail out what parts of the website need scribing.
If such restrictions on purpose aren't in place, there's a chance the developer could use your confidential ideas to found a rival company, taking unfair advantage of your hard-earned information. However, in the majority of situations, the conventional language in the given template should suffice.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
The way you utilize your confidential data is linked to the motive behind signing an NDA. Essentially, this provision emphasizes that the confidential information should be deployed only in line with the stipulated purpose. Seems like a no-brainer, right? However, it's worth considering a scenario where someone could misuse confidential data to exploit the company. Having this provision helps to keep most sensitive talks private, thereby minimizing the potential risk of harm to both parties involved.
Take a moment to contemplate who might need access to the information. Make an effort to control its usage strictly within this circle of people. It's equally important that the recipient ensures that every person they disclose the data to also signs an NDA and commits to the same terms.
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 just handed your secret recipe to your business associate, let's call them the 'Recipient'. But unknown to you, the Recipient is part of a larger company. So how can you make sure your recipe doesn’t become the company's next big holiday feast? This is where the 'Limited Access' clause in your NDA comes into play.
Again, in most scenarios, our template's language should do the job. But it never hurts to make a list of who exactly needs a slice of your secret pie and limit the access to them. And remember, anybody the Recipient spills the beans to should be tied down by an NDA too, keeping your prized recipe firmly under wraps.
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
Now, let's talk about the 'exclusions' in your NDA - the stuff that doesn't come under confidential info. Including these in your NDA makes it more hassle-free if things ever got to a courtroom tango. The one you might consider removing is 4(a)(1), if you've already slipped some confidential info to the Recipient. Otherwise, stick to the exclusion list in our template, it'll save you tons of headaches.
(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
How long do you need your secrets to stay secret? That's determined by the 'term' of your NDA. It could be for a quick project, or you might want it to stick around indefinitely. The time scale should reflect the lifespan of the relationship. Remember, it's about as long as the trade secret remains secret.
We advise adding a provision stating that the confidential info needs protection even after the business relationship or contract concludes. If you're having trouble deciding, a rule of thumb is between one to five years. Bottom line? Your confidentiality term should cover you for as long as you need your info kept under wraps.
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?
A hiccup already happened, and you've let out some confidential info? Don't sweat it! We’ve got you covered. Our template can be adjusted to accommodate this scenario as well. You’ll want to tweak the template in a couple spots and here's how to do that.
How do I protect my trade secret?
Lastly, the reason we're big on NDAs is to safeguard your invaluable business intel. You don't just want your trade secrets to stay secret, you also want them to hold value. Need a hand figuring out what a 'trade secret' entails, if your information qualifies, or how to cocoon your trade secrets in protection? Check out our step-by-step guide.