Product Confidentiality Agreement: What it is and Why it’s Important

A product confidentiality agreement, also known as a non-disclosure agreement (NDA), is a legally binding contract between parties who wish to share confidential information pertaining to their products or intellectual property. This agreement establishes a legal framework to protect confidential information from being disclosed, misused, or stolen by those who come into contact with it.

In today’s fast-paced and competitive business world, protecting confidential information has become more critical than ever. Companies invest millions of dollars in research and development to create new products, services, and intellectual property. These assets must be safeguarded from unauthorized disclosure or misuse to prevent others from copying or profiting from them.

A product confidentiality agreement provides a legal remedy if confidential information is disclosed without authorization. The agreement typically outlines the terms and conditions of how the confidential information will be shared, how it will be protected, and what actions will be taken if the agreement is breached.

Who Needs a Product Confidentiality Agreement?

Product confidentiality agreements are commonly used in various industries, including technology, pharmaceuticals, engineering, and manufacturing. These agreements are suitable for any business or individual seeking to protect confidential information from being disclosed.

If you are considering sharing confidential information with partners, investors, or employees, a product confidentiality agreement should be executed before any information is disclosed. This will ensure that the recipient understands the sensitive nature of the information and their obligations to protect it.

Product confidentiality agreements are also beneficial for businesses that are engaged in mergers and acquisitions. The agreements can assist in protecting the value of the intellectual property of both companies, reduce the risk of litigation, and enable a smooth transition of ownership.

What Should Be Included in a Product Confidentiality Agreement?

Product confidentiality agreements can be customized to suit the needs of the parties involved. However, they usually include the following key elements:

1. Definition of Confidential Information: The agreement should clearly define what information is considered confidential.

2. Obligations of the Recipient: The recipient must acknowledge and agree to maintain confidential information’s confidentiality and not to disclose or use it except as permitted by the agreement.

3. Exclusions: The agreement may specify certain exclusions where confidential information can be disclosed without penalty.

4. Term and Termination: The agreement should specify the period of time the agreement is valid and the circumstances under which it can be terminated.

5. Remedies: The agreement should outline the consequences of violating the agreement and the remedies available to the disclosing party.

6. Governing Law: The agreement should specify which law will govern the agreement and the jurisdiction where any disputes will be resolved.


In today’s business environment, product confidentiality agreements are essential to protect confidential information from unauthorized disclosure, misuse, or theft. They provide legal protection for businesses to safeguard their intellectual property and maintain their competitive edge.

If you are planning to share confidential information, invest in a product confidentiality agreement to protect your assets and ensure that your company’s intellectual property stays secure. You can consult with legal counsel or use online legal templates to create a customized agreement that suits your specific business needs.