A confidentiality agreement is a legally binding contract. It may also be called a non-disclosure agreement. It provides that one party will disclose its confidential information, such as trade secrets and know how, to another, and that the recipient of the information must keep that information secret and confidential, and must not misuse the confidential information.
A confidentiality agreement can be made where one party makes disclosures to the other, or where each party makes disclosures to the other.
Confidentiality agreements facilitate candid confidential discussions between parties that may for example, wish to exchange information about:
It is critical that there is a signed confidentiality agreement in place before confidential information is disclosed, especially if the confidential information is very important (e.g. trade secrets and know how).
If the confidential information to be disclosed is an invention, its disclosure before the filing of a patent application will affect the novelty of the invention, and preclude a patent from being granted.
Even after filing a patent application, it is prudent to still have a confidentiality agreement in place. You may make the commercial decision that it is advantageous to allow your patent application to lapse and to refile a fresh application. But doing so will not be possible if there has been a prior non-confidential disclosure.
In any case, it is not unusual in the course of discussions to disclose aspects of IP that are not necessarily encompassed within a patent application. There may be know how or trade secrets disclosed, or there may be financial or other business information disclosed, which are just as important to be made subject to confidentiality obligations.