Virtually every business entity in Colorado has information that it regards as secret or confidential. This information can range from customer lists to complex patents. All business owners want to protect their secret information from disclosure to competitors, but they often need legal help to devise and employ the correct legal device.
Colorado offers businesses two basic methods of protecting confidential information. One option is a non-disclosure agreement between two or more parties, and the second is reliance upon Colorado’s trade secrets act.
A non-disclosure agreement is a private contract between two or more parties who want to discuss a business arrangement such as a merger or acquisition without concern about having their business secrets passed on to parties that are not part of the discussion. A non-disclosure agreement can provide very flexible protection by identifying the information that the parties agree is confidential and providing penalties for its unauthorized disclosure.
Colorado Trade Secrets Act
The Colorado Trade Secrets Act is a state statute that defines trade secrets and provides penalties for the unauthorized disclosure of such information. A company must follow certain specified procedures for maintaining the information’s confidentiality in order to qualify for the Act’s protection. The advantage of relying on the trade secrets act is than no specific agreement is required; the business must merely take reasonable steps to protect confidential information from unauthorized disclosure. The only drawback from relying on the statute is that the company attempting to protect its information must abide by the definition of confidential information in the statute. Fortunately, this definition is very broad and can be applied to many different kinds of information.
Any business owner who wants to ensure the confidentiality of a company’s business information may wish to consult an experienced corporate attorney for advice on whether a non-disclosure agreement or the trade secrets act provides better protection. A knowledgeable lawyer can provide helpful advice and draft any contracts that may be necessary to provide the desired protection.