Q: My business involves mineral cosmetics. The actual manufacturing of the cosmetics is done in the Philippines but I import my raw materials from China, Japan, and other Asian countries. I paid a local laboratory a huge amount to develop the formula for the cosmetics and I'm constantly afraid that the formula would leak out. What preventive measures can I take to make sure that my employees do not divulge my formula to others? What about my foreign suppliers, can the same preventive measures apply to them?

A: Have all your employees sign a Confidentiality Agreement, or Non-Disclosure Agreement.

In a confidentiality agreement, the parties agree not to disclose certain information related to a business formula, invention, technology, schematics, or any other industrial secret.

A confidentiality agreement can either be: (1) mutual, meaning both parties are bound to keep the covered information confidential; or (2) unilateral, meaning only one party to the agreement has to keep the information confidential. In your case, your lawyer will have to draw up unilateral confidentiality agreements, since only your employees will be asked to keep the information confidential.

The same non-disclosure agreements may be used for your foreign suppliers, but your lawyer should first find out if there are special procedures that you need to follow to make the agreements binding in those foreign jurisdictions.

Here are some essential information that must appear in all your confidentiality agreements:

1. Names and addresses of the parties
2. A definition of the information intended to be covered by the agreement
3. Exceptions to the confidentiality clause, if any
4. The party who is bound to keep the information confidential
5. The time period covered by the agreement
6. Permissible disclosures, if any
7. Sanctions for unwarranted disclosures
   

Reeza Singzon is a lawyer specializing in civil, commercial, and labor law. Before becoming a lawyer, she worked in media for more than 10 years, writing and producing news programs for TV and working as an editor and columnist for a newspaper. For questions or comments, Atty. Reeza may be reached at reeza.singzon@gmail.com, or post your own legal question here.  

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