ndas – streamlining the process using technology … nda program...vs. mnda/citr “general” nda...

1© 2008 Cadence Design Systems, Inc. and Cisco Systems, Inc. All rights reserved.

NDAs – Streamlining the Process Using Technology and Smart Negotiation

Gabrielle Walker, Cadence Design Systems, Inc.Graham Allan, Cisco SystemsJoe Colliss, Cadence Design Systems, Inc.


Universal Goals for Legal Department

222

How do we ensure regulatory and legal compliance without

impeding the business?

How can we improve the quality of services we offer to customers and employees?

How can we increase the productivity of the company and the legal department?


AgendaTraditional NDA process flow

Problems with paper

Problems with employee compliance

Cisco NDA Central process flow

Cadence NDA Express process flow

Highlights

Forms and Internal Process Considerations

Drafting Tips and NDA Do’s & Don’ts

Discussion of NDA Terms

Q&A


Typical Paper & Ink NDA Process


Problems with paper NDAs

Too slow, particularly in Sales & Support opportunities

Many not created, signed, or filed properly

Too many “wild” templates in use

Waste too much paper, fuel, money, and time

Zero-leverage activity for legal staff


Problems with paper NDAs

Difficult to keep track of NDA during signature process

Simultaneous review of NDA by separate attorneys

No visibility of whether an existing NDA is in place

Battle of the forms delays the process

Ugly examples


Paper NDA: dueling date formats


Paper NDA: no date


Paper NDA: no party name


Paper NDA: MIA“Can you please advise whether EEEEEEE EE EEEDD has an NDAon file? The Account Manager says that there is one but I can’t find it.”

“Do we have an NDA with EEEEEEEE ?The Account Manager says that there is

one but I can’t find it.”

“EEEEEEE EE EEE says that they have an NDA with us from sometime in 1997. Can

you see whether we have a copy?

“My Account Manager saysthat we don’t need an NDA for EEEE because

we already have one. Can I see a copy?

“We found 47 NDAs in an old desk. Should we send them to the file room?


Problems with Employee Compliance

One size does not fit all

Confusion of whether an NDA exists or is needed

Limited or no visibility of NDA terms

Changes to staffing or project scope during term

NDA may expire while project is still ongoing

Lack of training and refresher courses


What’s the Solution?How Do You…….

Improve efficiency?

Provide meaningful visibility to employees?

Change employee behavior?

Ensure compliance with NDA requirements?

Keep track of all those NDAs?


Cisco and Cadence – a tale of 2 companiesCommon Problems

– Paper, paper, and more paper

– Frustrated and confused employees

Different Approach

– build vs. buy

Remarkable Results

– greatly improved efficiently

– empowered employees


Cisco Solution: NDA Central

Web based tool launched June 200524 x 7 self-service non-disclosure agreementsAny Cisco employee can create; system manages terms, signatures, workflow, and filing


Cisco Solution: NDA Central

Frees legal resources for more leveraged work

Automates drafting, approval, signature, and filing

Reduces process time, costs, and risks

Empowers employees and raises NDA quality

Reduces risks of bad or lost NDAs

Supports Cisco’s green initiative to save energy and resources.

Think before you print.


NDA Central Process

more


NDA Central Process

Legal review triggered if:• Change to sales disclosure & purposes• Disclosure of source code• Disclosure of military technology-or-• Requestor asks close


NDA Central Components


Cadence Solution: NDA Express



Worldwide, fully-automated system, including:

– Search tool allowing employees to locate & view NDAs

– Fast and easy automated creation of Cadence NDAs

– Posted online processes and forms for external NDAs

– Status tracking of NDA from start to finish

– Visibility to all Cadence employees for completed NDAs



– Alerts for pending return or soon to expire NDAs

– Personal “MyNDA page”

– Online tutorials and mini-demos of key functionality

– FAQs, announcements and other NDA information

– 24 x 7 access by Cadence employees


Cadence Solution: NDA ExpressSelf-service approach:

– Questionnaire ensures legal review when needed

– All Cadence forms have been pre-approved by legal

– Use of “master” form reduces legal review

– Users create a new “CITR” for each new project – biz terms only

– Online send and signature – no signed originals needed

– NDA “Summaries” with key terms and special requirements


Highlights – NDA Express

Immediate acceptance and use by employees – over 1,000 NDAs in system since (US) launch in November, 2007

Full visibility to Cadence employees of existing NDAs and obligations

One stop shop for all NDAs

Employee empowerment – they own the process from start to finish - legal involvement is limited

NDAs in hours – instead of days or weeks = customer satisfaction! ☺

Paper documentation has been substantially reduced


Highlights - NDA Express

Key Behavioral Changes:

Employees now promote Cadence forms of NDAs

Employees communicate with each other about NDAs

External customers are adopting Cadence forms of NDAs

External parties are providing “process” documents for external forms and are moving to “master” agreement approach.


Highlights - NDA Central

As of Fall 2007, over 8,000 NDAs in system

Over 200 new NDAs per month and growing with minimal legal resource cost.

NDAs in hours not days



Regardless of the NDA Solution your company/clients decide upon, here are some items to consider:

Documentation – Decide how your documentation should work.

Education – Educate your employees on how the documentation should work.

Organization – Develop processes to facilitate the success of your NDA solution.



General NDA vs. Project-Specific NDA vs. MNDA/CITR“General” NDA – “All-encompassing” NDA without a specific description of confidential information or a purpose for disclosure. “Everything related to anything” is confidential.

Project-Specific NDA – Specific description of confidential information and purpose is included. A new NDA is required for each transaction, and the legal terms must be reviewed each time.

MNDA/CITR (Master NDA and Confidential Information Transmittal Record) – One “Master” NDA with all the legal terms. The specific description of confidential information and the purpose are set forth in a project-based CITR. New CITRs can be completed with minimal legal review.



Subsidiaries and AffiliatesHow are your company’s subsidiaries and affiliates affected by an NDA?

Are the parent’s subsidiaries a party to the NDA? (Example: “This Agreement is entered into between Company A, on behalf of itself and its subsidiaries…”)

Alternatively, can subsidiaries bind the parent in the subsidiary’s NDA? (Example: “…on behalf of its parent and its affiliates…”)

Does the NDA allow sharing by and between affiliates?



Third Party DisclosuresHow does your documentation addresssharing information with a third party?

3Way NDA – All involved parties agree to be bound by the same terms, and those terms are visible to all parties.

“Permission Agreement” or multi-party CITR – Allows the disclosure of specific information, for a specific purpose, to an approved third party. (Company A has no visibility to the NDA between B and C)

Requirement that B’s NDA with C is “at least as protective” of the confidential information as the requirements of A’s NDA with B.

Requirement that B shall be responsible for any breach by C

A

B C? ?



Special CircumstancesAre there special circumstances that require additional provisions?

Feedback? Are you expecting the outside party to provide “feedback” or other suggestions regarding your confidential information? If so, will you need a license to use this information?Residuals? Are residuals applicable? Coterminous with another document? Does a separate agreement reference the NDA with respect to confidentiality provisions? If so, will you want the other agreement to automatically terminate if the NDA expires or terminates?



EDUCATE - Don't Assume Employees Know the BasicsWhat is confidential information?

What is an NDA? Are all NDAs the same?

Explain how and when to use your company’s forms.

If we have an NDA, why do we need a CITR?

Do I need to mark our company’s information “confidential”?

Explain where employees can go for information and resources.

Provide new employee training/resources (“My old company did things differently.”)



EDUCATE - Provide good and bad examples to prevent descriptions that are too broad, superfluous, or ridiculous.

Good. “Product roadmaps, testing requirements, and product cycle”

Bad. “Intellectual property and information”

Ugly. “TBD”



Software and ProductsSoftware should be provided under a license agreement not under an NDA. License Agreements provide protections not found in an NDA:

License grant/restrictions;

IP ownership provisions;

Warranties;

Indemnification; etc.



Initial Disclosures vs. Actual Business Relationship

The “purpose” of an NDA is often misstated:“To perform consulting services”

“To jointly market a product”

“To give them beta code”

Employees can discuss the potential business relationships under an NDA, but a separate agreement may be needed once the actual business relationship commences.


NDA Drafting Tips and Do’s & Don’tsDo:

Educate your Employees regularlyReview and update your forms regularlyWork with your business partners to establish processes

Don’t:Assume your employees understand how to use NDAsRequire duplicate originals – it slows down the process

Additional Resource: See “Dreadful Drafter” Article by John T. Ramsey included in your handouts for additional drafting tips and NDA Do’s and Don’ts.


NDA Terms: To Mark or Not to Mark?

“Recipient’s duty to maintain confidentiality extends only to that Confidential Information which: (i) if disclosed in tangible form, is marked Confidential, or with a similar legend, at the time of disclosure…”

“Our employees need to be notified if they are

receiving confidential information so that they

can protect it accordingly.”

“So if our employees fail to mark documents as

confidential, then you’re not required to protect it?”



“Recipient’s duty to maintain confidentiality extends only to that Confidential Information which: … (ii) if disclosed orally, or if inadvertently not identified as Confidential at the time of disclosure, is summarized and designated as Confidential by Discloser in a written memorandum delivered to Recipient within thirty (30) days after the disclosure.”

“Following up oral disclosures with a written summary is the only

way to prevent a ‘he said, she said’ scenario. With a written

summary, there can be no question that the parties were advised of the

confidential nature of the discussions.”

“This just doesn’t follow normal business practices. We shouldn’t need to follow up a discussion with a written summary.”



“Notwithstanding the foregoing [marking requirements], confidentiality extends to any Confidential Information that is of such a nature and/or disclosed under such circumstances that a reasonable person would consider such information to be confidential information of the Discloser.”

“First, this language negates the marking requirements. Second,

‘reasonable’ minds differ. Do you want to be in front of a judge

debating the ‘reasonableness’ of an employee’s understanding of what should and should not be

confidential?”

“People should know whether something is confidential, even if it

unintentionally isn’t marked or if they forget to follow up with a written summary.”


NDA Terms: Residuals“‘Residual Information’ means information in the non-tangible form of generic knowledge and know-how that is or may be retained by persons who have access to Confidential Information. The parties acknowledge and agree that they and their respective employees may utilize for any purpose any Residual Information resulting from having access to Confidential Information.”

“This negates the purpose of a confidentiality agreement. If one of your employees ‘remembers’ the content of our confidential

information, then that information is no longer protected and you can

use it however you want?”

“We can’t prevent our employees from remembering something. This language protects the parties from contamination in the event

‘generic knowledge’ is used by an employee in another

project.”


NDA Terms: Residuals

It shall not be considered a breach of this Agreement for the recipient to use for any purpose the Residuals as defined herein. The term “Residuals” means information in non-tangible form, including but not limited to ideas, concepts, general know-how or general techniques, which is inadvertently retained in the mind resulting from a person’s rightful access in accordance with this Agreement, without further reference to any material that is written, stored in magnetic, electronic or physical form or otherwise fixed; provided, however, that Residuals shall not include information, which is retained intentionally. The term “Residuals” includes without limitation underlying ideas but specifically excludes computer program code in which such underlying ideas are expressed. The recipient shall have no obligation to limit or restrict the work assignment of persons having access to Confidential Information or to pay royalties for any work resulting from the use of Residuals. However, the foregoing shall not be deemed to grant to the recipient a license under any of the disclosing party’s patents, utility models, trade marks, copyrights, database rights, design rights or semiconductor topography rights.

A clear and limited definition of “residuals” and an affirmation that no license is being granted may be more

acceptable to the parties.


Q&A

Thank you for your time and attention.

Questions?

Demo of ContactExpress NDA from Business-Integrity used in Cadence NDA Express system: http://www.business-integrity.com/ContractExpressNDADemo.html

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