CDA vs NDA: What’s the Difference?

Confidential Concept. Word on Folder Register of Card Index. Selective Focus.

It doesn’t matter what you call your confidentiality agreement as long as you have all of the essential components laid out in black and white. The NDA or CDA paperwork should disclose who the agreement is between, what should be kept in confidence, how long the information has to remain classified, and the agreed-upon terms of the agreement.

Is there a difference between an NDA (or Non-Disclosure Agreement) and a CDA (or Confidential Disclosure Agreement)? The answer is “yes” though the differences are rather subtle. It depends on what you are looking to get out of protecting your company and its assets.

If you are trying to figure out what type of confidentiality agreement works best for your specific situation, you might consider consulting with an attorney for legal advice. Continue reading to learn more about the minute differences between CDA vs NDA.

Similarities Between the Two Documents

These legal documents are very similar and can sometimes be used interchangeably. Through the creation of an NDA or CDA, all parties are legally bound to avoid disclosing classified information. The agreement means that the information disclosed to another person, regardless of their involvement, is given in confidentiality and is expected to remain a secret.

Signers of a confidentiality agreement such as a CDA or an NDA may become involved in legal recourse if they were to take part in:

  • Copyright infringement
  • Trade secret misappropriation
  • Breach of fiduciary duty
  • Conversion 
  • Intellectual property violations

Once the document is signed, the signer is held accountable for what they might divulge to another person outside of the company. A violation of the agreement means that the party that initiated the agreement can file a lawsuit against the other party. When this happens, the other party may be responsible for paying for the damage that it might’ve caused to the company’s reputation.

The difference between the two agreements, however, lies in the nature of the relationship between the parties and the agreement. For example, one is used over the other in clinical trials where certain information gets disclosed to the party with a certain degree of secrecy.

What Is CDA?

A Confidential Disclosure Agreement (CDA) is a legal document summarizing the two-way exchange of information between at least two parties. The agreement helps to protect both parties who may have contributed to the improvement of intellectual property during the time where they were working together. This way, neither party is able to take credit for the other’s work.

The CDA is less common in the U.S., but more common in Australia, New Zealand, England, and Canada. A CDA generally refers to the need for confidentiality for the long term. This is generally the information that the signer of the agreement won’t disclose even after a certain amount of time has passed. 

Uses for CDA

A CDA can be a precursor to a clinical trial. The CDA (containing protocols, etc) is sent to the potential participant. The participant reads over the agreement before deciding to take part in the trial. Whether they agree to take part in the trial or to exit the trial, they must sign the document to safeguard the information within the document. 

What Is NDA?

An NDA or Non-Disclosure Agreement is generally signed at the beginning of employment to safeguard trade secrets when the employment comes to an end. It is a necessary tool to help prevent an employee from:

  • Spilling a company’s trade secrets to a competitor
  • Prevents the theft of intellectual property of a company

Rather than being a way to disclose certain information (in the CDA), an NDA is meant to protect classified information. 

It is a one-way obligation of secrecy or confidentiality rather than the multi-party agreement found in a CDA. NDAs are more commonly used in the United States to protect a company’s trade secrets. This also helps to hinder a disgruntled employee from taking your intellectual 

An NDA agreement generally lasts in the short term to protect a company’s assets should the relationship between the parties end, especially on bad terms. The agreement can also state that the individual cannot work for a competitor for a certain time following the end of their employment. This can be a few years, but over time, the agreement dissolves. 

Uses for NDA

A non-disclosure agreement is more likely to be used in a third-party or startup company situation. If a company is just starting out, they are figuring out what methods work best for them. Once they find their rhythm and gain traction in their industry, they don’t want anyone else to steal this information.

The NDA makes sure that anyone who becomes privy to their work is unable to turn around and use these methods for their own success. Non-disclosure agreements are essentially going to help a company keep its competitive edge over its competitors. After all, the goal of these companies is to become the best in the industry.

CDA vs NDA: Which One Should You Use?

When determining the type of confidentiality agreement you need for your employees, consultants, or any parties involved, you need to figure out what kind of protection or confidentiality you need from them. In general, the CDA vs NDA decision boils down to what you are using the confidential agreement for and to your preference for the title that you give the agreement.

If you found this post to be helpful, be sure to check out our other law-related material for more great information!