confidentiality agreement enforcementNon-disclosure or confidentiality agreements, which allow one party to legally protect trade secrets or other proprietary information exposed to third parties, can prove useful in a number of business contexts. For instance, in the event of a potential merger or sale of a business, both parties may find it useful to have a confidentiality or non-disclosure agreement in place that covers information learned in conducting due diligence.

We see this with Bayer AG, which is currently in the process of attempting to acquire U.S. seed company Monsanto. Monsanto has reportedly allowed Bayer AG to take a “glimpse” into its books and provided a “limited drip of information” in advance of agreeing to any sale. If negotiations were to move toward a signed purchase and sale agreement, a non-disclosure or confidentiality agreement would provide Monsanto with the ability to allow Bayer AG to perform due diligence with access to all necessary internal information without the risk that any information learned by Bayer AG could be disseminated to any third parties or used by Bayer AG for its own benefit. In addition to specifying how the parties can use such information, non-disclosure and confidentiality agreements can allow the owner of the information, in this case Monsanto, to obtain injunctive relief to prevent disclosure if such disclosure might be imminent.

Non-disclosure agreements can also be used to protect proprietary information in other contexts. For instance, many hedge funds require that investors sign a non-disclosure or confidentiality agreement before they are able to learn how their money is being invested because such information is the backbone of the hedge fund’s business: their competitive edge over other funds is their portfolio, and so it must be kept secret. In yet another context, the federal government recently enforced a non-disclosure agreement signed by Matthew Bissonnette, a Navy SEAL who wrote a best-selling book detailing the “secretive raid that killed al-Queda leader Osama bin Laden.” Because Bissonnette signed a non-disclosure agreement with the federal government that stated he would submit any work for review by the Pentagon to make certain that no classified information would be released and then published his book without submitting it for such review, the federal government was able to force Bissonnette to agree to pay $6.8 million after “extensive negotiations.”