Drafting Nondisclosure Agreements for Information Technology - - PowerPoint PPT Presentation

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Drafting Nondisclosure Agreements for Information Technology - - PowerPoint PPT Presentation

Oct 01, 2022 244 likes •833 views

Presenting a live 90-minute webinar with interactive Q&A Drafting Nondisclosure Agreements for Information Technology Transactions Negotiating Key Provisions and Exclusions, Navigating Challenges for Information Disclosers and Recipients

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Presenting a live 90-minute webinar with interactive Q&A

Drafting Nondisclosure Agreements for Information Technology Transactions

Negotiating Key Provisions and Exclusions, Navigating Challenges for Information Disclosers and Recipients

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, SEPTEMBER 30, 2015

Satya Narayan, Attorney, Royse Law Firm, Palo Alto, Calif. D.C. Toedt, III, Attorney, On Contracts, Houston

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Drafting Nondisclosure Agreements for Information Technology Transactions

Strafford Continuing Education Webinars

  • Sept. 30, 2015
  • D. C. Toedt III

Satya S. Narayan

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  • D. C. Toedt III

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(The last name is pronounced “Tate” – it’s German) www.OnContracts.com dc@toedt.com

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Satya S. Narayan

www.RoyseLaw.com snarayan@rroyselaw.com

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Clauses & extensive annotations: www.CommonDraft.org

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Sources of law (in U.S.)

  • Uniform Trade Secrets Act
  • Enacted in 47 states
  • Introduced in 2 more
  • Common law

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“Testing effect”

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Audience question: Confidential Information definition What three basic things does the law (in the U.S.) generally require for information to be protectable?

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A: The law (UTSA) requires: 1) Information has independent economic value 2) Not generally known to those who can derive econ. value from the information 3) Efforts to maintain secrecy of the information that are reasonable under the circumstances

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Three Rules of Protecting Confidential Information

(“Trigger warning”: Rule #3 offended one recent CLE attender)

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Rule 1: Lock It Up

(Within reason)

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Audience question: What simple things can be done to “lock it up”?

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Simple steps to “lock it up”:

  • Locked doors, file cabinets, etc.
  • Computers & networks:

Passwords Periodic security audits

  • Employees get only need-to-know access

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Rule 2: Label It

(But don’t go overboard)

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Rule 3: “Safe Sex”

3A: Use caution in choosing a “partner” (a party to which you’ll disclose information,

  • r from which you’ll receive information)

3B: Use “protection,” viz., an NDA

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Drafting issues

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Definition: A “two-way NDA” protects each party’s Confidential Information A “one-way NDA” protects …

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Audience question: Which is likely to be signed sooner: a one-way NDA, or a two-way NDA? Why?

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A: A two-way NDA is likely to be signed sooner

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Speaker question: Limit the protected-disclosure period?

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Speaker question: Limit the protectable- information categories?

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Speaker question: What sort of “ancillary” information should the disclosing party want to protect too?

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Protection of “ancillary” information

  • Third-party information furnished by discl. party
  • Receiving party’s notes, summaries, etc.
  • Affiliates’ information?

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Speaker question: Include a laundry list of specific types

  • f confidential information?

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Laundry list: Common Draft example

Algorithms; audit reports. Biological materials; business plans; business records. Circuit records; commercial information; compounds; computer programs; contracts; construction records. Data-center designs; designs; diagrams; documents; draft publications; drawings. Engineering records. Financial information; financial projections; financial statements; forecasts; formulas. Hardware items. Ideas; interpretations; invention disclosures. Leases. Machine-readable data; maps; market projections; marketing information;

  • methods. Offers; operational data; opinions. Patent applications (unpublished); plans; pricing information;

procedures; processes; product development plans; product information programs; projections; proposals. Research data; research plans. Samples; server-configuration designs; source code for computer programs; specifications; strategies. Tax bills; technical information; technical reports; technological developments; test data; title reports

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Speaker question: Confidentiality of parties’ dealings?

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Audience question: Name some standard exclusions from Confidential Information status (there are usually five)

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Standard exclusions *

(see Common Draft clause):

  • 1. Previously known by RP
  • 2. Provided by 3rd P w/o breach
  • 3. Independently developed by RP
  • 4. Published w/o breach
  • 5. Disclosed by DP to 3rd P w/o comparable restrictions

* Corroborating evidence required

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FACTS: 1) Alice discloses Confidential Information to Bob. 2) Later, a third party serves Bob with a civil subpoena for the information. Audience question: Should Alice’s information now be excluded from Confidential Information status? Why or why not? (Type your answers)

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A: No: A subpoena alone shouldn’t strip away Confidential-Information status

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FACTS: All parts of Alice’s Confidential Information can be found in public documents. Audience question: Should Alice’s information therefore be excluded from confidentiality status?

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A: No No – specific selections & combinations

  • f information (“secret sauce”)

can be confidential

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FACTS: Alice wants all information that she discloses to Bob to be presumed confidential. Speaker question: Should Bob agree?

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FACTS: Alice doesn’t want to have to mark her Confidential Information as such. Speaker question: Should Bob agree?

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A: Allow for a catch-up marking period? Exception for in-place information? Exception for “recognizably confidential” info?

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Audience question: What three specific obligations must a disclosing party demand

  • f the receiving party in an NDA?

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Mandatory confidentiality obligations:

  • 1. Precautions
  • 2. Nonuse (absent permission)
  • 3. Nondisclosure (ditto)

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Audience question: What level(s) of precaution should an NDA require the receiving party to take??

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Precautions to require of Rcv. Party:

  • 1. Not less than reasonable precautions
  • 2. Not less than for own comparable info
  • 3. Particular precautions?

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Speaker question: What kinds of uses of Confidential Information might an NDA pre-authorize?

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Authorized uses (from Common Draft):

  • performing the Receiving Party's obligations under Agreement;
  • exercising the Receiving Party's rights under Agreement;
  • assessing whether to enter into another agreement

with the Disclosing Party; and

  • any Other Particular Authorized Uses expressly agreed to

in writing by the parties

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Speaker question: What kinds of disclosures of Confidential Information might an NDA pre-authorize?

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Authorized disclosures (1) (from Common Draft):

  • All disclosures are need-to-know only, I.C.W. an authorized use
  • Employees
  • Officers & directors (& equivalents)
  • Other Authorized Recipients agreed to in writing

(requires confidentiality agreements)

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Authorized disclosures (2) (from Common Draft):

  • Disclosure in response to subpoenas, search warrants, etc.
  • RP must promptly notify DP – unless prohibited by law
  • RP must cooperate (at DP’s expense) in attempting to limit disclosure
  • Disclosure in public filings?

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Speaker question: Should Confidential Information be returned or destroyed upon termination?

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Return or destruction (from Common Draft):

  • Required upon request by disclosing party

(otherwise, requirement is likely to be overlooked)

  • Exception for backup media, etc. (burdensome, expensive)
  • Option: Retain archival copies (usually outside counsel only)
  • Option: Only commercially-reasonable efforts required
  • Confidentiality obligations still apply to retained copies

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Speaker question: Are there any particularly-dangerous clauses that a contract reviewer should watch for in an NDA?

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Dangerous clauses:

  • Assignment of IP ownership – Stanford Univ. v. Roche case
  • Noncompetition covenant
  • RP gets “residuals” rights in Confidential Information

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Speaker question: What about litigation clauses in an NDA?

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Litigation clauses:

  • Forum selection – DP might want to sue RP in RP’s home court
  • Governing law – ditto
  • Injunctive relief:
  • Courts likely will enforce stipulation of irreparable harm – be careful2
  • RP won’t want to waive bond requirement

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Audience question: What other kinds of provisions might a disclosing party want in an NDA?

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Possible additional RP obligations (from Common Draft):

  • RP cooperates w/ DP in going after misappropriators
  • RP indemnifies DP for all misappropriation and all 3P claims

resulting from RP use or disclosure of Confidential Information

  • Any others? (Type your answers)

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Audience question: What other kinds of provisions might a receiving party want in an NDA?

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Possible additional RP provisions (from Common Draft):

  • RP gets “residuals” rights
  • DP warrants that it has the right to provide its Confidential

Information to the RP

  • Any others? (Type your answers)

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