Proprietary Information Agreement Template for the United States

A Proprietary Information Agreement is a legally binding contract that protects your confidential business information when sharing it with third parties. Under United States law, this agreement creates enforceable obligations to maintain secrecy and provides legal remedies if your proprietary information is misused or disclosed without authorization.

When do you need this document?

You need a Proprietary Information Agreement whenever your business must share sensitive information that could harm your competitive position if disclosed. This includes situations like due diligence for potential acquisitions, joint venture discussions, vendor evaluations, or when hiring contractors who will access your trade secrets. Technology companies use these agreements when demonstrating software to potential clients, while manufacturers rely on them when sharing technical specifications with suppliers. Even service providers need protection when discussing proprietary methodologies or client lists with potential partners.

Key legal considerations

Your agreement must clearly define what constitutes confidential information, including trade secrets, financial data, customer lists, and proprietary processes. The scope should be specific enough to be enforceable but broad enough to cover all sensitive materials. Include provisions for marking confidential documents and handling unmarked oral disclosures. Consider the permitted uses of information-whether it's solely for evaluation purposes or if limited implementation is allowed. Address the return or destruction of confidential materials when the relationship ends. Include specific remedies like injunctive relief and attorney fees, as monetary damages alone may be insufficient for trade secret breaches.

Legal requirements in the United States

Under the Defend Trade Secrets Act (DTSA), your agreement must include specific language about whistleblower protections to qualify for enhanced federal remedies. This notice provision is mandatory for agreements with employees and contractors. The agreement must comply with state Uniform Trade Secrets Act provisions, which vary slightly by jurisdiction but generally require reasonable efforts to maintain secrecy. Consider National Labor Relations Act limitations that protect employees' rights to discuss working conditions-your agreement cannot prevent protected communications about wages, hours, or workplace safety. Ensure the duration is reasonable, typically 3-5 years, as courts may reject perpetual confidentiality terms. The agreement should specify governing law and jurisdiction for disputes, and include mutual obligations if both parties will share confidential information.