Q&A: What if my employees divulge my business formula?
Protect yourself by having your employees and suppliers sign a confidentiality agreement.
By: Atty. Reeza Singzon | Jul 31, 2013 14:00 pm
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.