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What’s New in EasyNDA’s Non-Disclosure Agreement

Wednesday, January 7th, 2015

“Revision cont’d” under Creative Commons License by Djenan Kozic

Today we published a release that improves the terms of our mutual non-disclosure agreement (MNDA).  As a service to our subscribers, we frequently review our standard NDA to ensure we provide a document that should meet the needs of equitable confidentiality agreements.  As always, have your attorney review EasyNDA’s MNDA to ensure it’s suitable to your needs.

These are the revisions made to our MDNA in this release:

1. INFORMATION PROTECTED

   1.1  Proprietary Information means information that the receiving party (“Recipient”) knows or has reason to know is confidential, proprietary, or trade secret information of the other party (“Discloser”), either (i) because the information is disclosed by the Discloser in writing and is marked as confidential or proprietary, or with words of similar import, at the time of disclosure or (ii) if disclosed by the Discloser in any other manner, is identified as confidential or proprietary at the time of disclosure <strike: and is also summarized in a written memorandum marked as provided above and delivered to the Recipient within ten (10) business days after disclosure> or (iii) because of the nature of the information and the context in which it was disclosed.
   
   REASON: This clause is unnecessary given the broad protection provided by subsection iii.

   Without limitation, information concerning business models and strategies, network design and traffic, customers, and pricing is in all cases covered under clause (iii), subject to Section 4.

   REASON: “network design and traffic” is too specific for a general NDA agreement.

    

2. EXCLUSIONS AND SCOPE OF OBLIGATIONS:

   4.1(iv) is or becomes available to the public through no fault of Recipient, (v) is required to be disclosed by a regulatory authority or by governmental or court action, provided that Recipient <strike:  uses its reasonable efforts to provide advance and replace with:> “provides prompt written” notice of such required disclosure to Discloser and cooperates with Discloser, at Discloser’s expense, in seeking reasonable protective arrangements; or (vi) is disclosed by the Recipient with the Discloser’s prior written approval.

   REASON:  The word “reasonable” is always going to raise the antennae of corporate counsel, in particular in this context. What is reasonable in this context is for parties to provide prompt written notice; there’s no reason they can’t and this should be spelled out to minimize contract negotiations ping-pong.

    

3. RECIPIENT’S DUTIES

   Recipient shall keep the Proprietary Information in confidence, and shall use the same degree of care (but no less than a reasonable degree of care) to prevent the unauthorized use, dissemination or publication of the Proprietary Information as the Recipient uses to protect its own Proprietary Information of a similar nature. Recipient shall use Discloser’s Proprietary Information only for the purpose described above and shall not disclose any such Proprietary Information except to employees, agents, principals, consultants, or individual independent contractors of Recipient who have a need to know, and <strike:  Recipient shall have obtained the prior agreement of such persons to abide by and be and replace with:> “who are” bound by obligations of confidentiality as strict as those herein. Recipient shall be primarily liable to  Discloser for the compliance of each person described in this Section.

   REASON:  Requiring the Recipient to “have obtained the prior agreement” as originally drafted unnecessarily excludes those third parties (e.g. attorneys, accountants, etc.) who are bound by professional ethical requirements to confidentiality.  The proposed revision covers that situation, and by implication requires the Recipient to in fact obtain a prior agreement to the extent that such professional requirements do not already exist.

    

4. RIGHTS IN PROPRIETARY INFORMATION

   Proprietary Information remains the property of Discloser, and Recipient does not acquire any intellectual property rights under this Agreement except the limited license rights necessary to use Discloser’s Proprietary Information for the purpose described above. Recipient shall preserve all proprietary markings on Discloser’s Proprietary Information provided to Recipient. The Proprietary Information, including all copies thereof, shall be returned to the Discloser or destroyed upon <insert:> “written” request of the Discloser.

   REASON:  It’s a pain to track down all disclosed information.  Adding the word “written” reduces the possibility of having such a task become a legal obligation.  And in particular, it eliminates such an obligation automatically arising w/o notice.  If a party cares enough about requiring the return of previously disclosed info, then they should affirmatively be obligated to make this request in writing.

    

5. CHOICE OF LAW

   This Agreement shall be governed by the laws of the State of ____ without regard to its conflict of laws principles.

   <add:> “All disputes between the parties arising out of or in connection with this Agreement shall be subject to the exclusive jurisdiction of the courts located in the State of ____. The award shall be final and binding upon the parties hereto.”

   REASON: The previous version only specified which governing law would apply.  That left open the legal forum in which any disputes over the NDA would be heard.  Also, the “final and binding” language removes the possibility of the appeal of any award, which reduces the possibility of any such litigation stretching out over an extended period of years.
   

6. <add:>  MISCELLANEOUS

   (a)  The exchange of a fully executed Agreement (in counterparts or otherwise) by fax or by electronic mail shall be sufficient to bind the Parties to the terms and conditions of this Agreement.

   REASON:  Permitting execution in counterparts and via e-mail facilitates the execution in advance of the meeting process.

   (b) The Parties acknowledge that they have each had the opportunity to have this Agreement reviewed and negotiated by competent counsel, and waive any right they may have to interpret a writing against the drafter thereof.

   REASON: This clause protects originators of NDAs (those who send an NDA to others) by removing the general contract interpretation principle that any ambiguities operate against the drafter of any given contract.

    

7. NOTICES

   <add:> Notices will be sent to the addresses set forth in this Agreement or such other address as either Party may specify in writing.
   
   REASON:  The previous language did not specify the address to which notices should be sent.