ALL NDAs ARE NOT CREATED EQUAL

Experienced attorneys have learned this lesson the hard way. There is not a “one size fits” all non-disclosure agreement. The language depends on the circumstances. Are you the party disclosing the information or receiving it? If you are disclosing the information, you’ll want to be sure that it captures all of the information and has convenient remedies if there is a breach.

Conversely, if you are receiving confidential information, you’ll want to make sure that the disclosing party clearly marks all “confidential” information so that there is no confusion in the event of a dispute.  This means that if information is orally conveyed, it should be followed up with a written confirmation that memorializes the discussion as “confidential.”

Similarly, the receiving party will want to make sure that it protects its ability to continue to use information already in its possession or learned from another source. As such, there should be carve outs expressly pertaining to these issues.  If you are the disclosing party, you may want to require that the receiving party have prior written evidence of its possession of such information.  However, if you are the receiving party, you may view this as being too onerous, especially if your company is not great about maintaining historical records.

In the patent context, an often overlooked area pertains to “improvements” to the disclosed technology. Technically, whoever invents the “improvement” is the owner. However, the discloser can certainly take the position that but for its disclosure, the improvement would have never happened and as such, it should own any improvements.

In short, there are many potential traps associated with NDAs and enclosed are just a few.  As they don’t need to be too lengthy, NDAs are often overlooked and quickly signed. However, they can be an extremely important tool to protect a company’s rights and as such, should be carefully tailored to meet a company’s needs. Beware. One NDA may not be adequate for all situations.

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