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.
Tag: nda
But You Didn’t Know About It So You Shouldn’t Disclose It….
An issue that we have dealt with over the years is whether information disclosed in a published patent application can be claimed as a trade secret. The argument is that although the information is in the public domain, the receiving party would never have found it. The Fifth Circuit recently addressed this issue. Read a good discussion of the case. It is not surprising that the Court concluded that information contained in a published patent application was not protectable as a trade secret under Texas law.
However, there is a lesson here. Companies should make sure that their NDAs contain carve outs for any information that is ultimately disclosed to the public by the disclosing party. This way, it will make it harder for the disclosing party to claim that something that it disclosed to the world in its patent application is somehow a trade secret. Further, they should conduct their own investigation by searching the USPTO’s website for any relevant, published patent applications/patents owned by the disclosing party and should get representations from the disclosing party that the information, which is being disclosed, has not already been publicly disseminated and is not the subject of a patent application.