trade secrets agreements v. ndas

7/26/2019 Trade Secrets Agreements v. NDAs

1/22

Trade Secret agreements

v.NDAs
https://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDF


2/22

In order to protect these secrets, there are several common ways

that businesses use to protect these secrets.

These include using a patent, a non-competing agreement, a

non-solicitation agreementand a non-disclosure agreement(NDA).

Each of these legal tools can produce very different results.


3/22

The patent


4/22

With a patent, you're establishing a monopoly on a proprietary item

but only for a limited amount of time.

Not everything can be patented.

When filling for a patent, you're required to reveal all details about

your secretand this is made available to the public.


5/22

The trade secret


6/22

A trade secret has no time limitationand can last forever.

It remains a trade secret indefinitely as long as you can prove that

the secret continues to possess commercial value, confers some

sort of economic benefit to you and you have made an effort to

keep it a secret.

So, besides taking measures to protect your trade secret, what

else can you do?


7/22

The NDA


8/22

The non-disclosure agreement - sometimes shortened as "NDA"

- is also known as a trade secret agreement or a confidentiality

agreement.

An NDA is a legally binding contractbetween parties that

requires them to keep certain information confidential.


9/22

Define trade secrets and confidential

A trade secret is treated differentlyfrom merely confidential

information by the courts.

On top of providing such a definition in your legal agreement,

you should develop a practice of clearly marking information

that you disclose as either "Confidential" or "Trade Secret" to

avoid confusion.


10/22

Indefinite period

In an ordinary NDA, it's advisable that you specify a defined period

of time for which the confidentiality is to last for.

This is to avoid any potential risk of a courtdeclaring that an NDAis too restrictive.

However, this should not applywhen it comes to trade secrets.


11/22

Here are example clauses from Coca Colas Agreement on

Confidentiality, Non-Competition and Non Solicitation(1) that

demonstrate the difference in the amount of time confidentiality

is expected for information that's considered a trade secret and

what's merely confidential:

(1) http://www.wikinvest.com/stock/Coca-Cola_Company_(KO)/Agreement_Confidentiality_Non-competition_Non-solicitation
http://www.wikinvest.com/stock/Coca-Cola_Company_(KO)/Agreement_Confidentiality_Non-competition_Non-solicitationhttp://www.wikinvest.com/stock/Coca-Cola_Company_(KO)/Agreement_Confidentiality_Non-competition_Non-solicitationhttp://www.wikinvest.com/stock/Coca-Cola_Company_(KO)/Agreement_Confidentiality_Non-competition_Non-solicitationhttps://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDFhttps://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDF


12/22
https://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDFhttps://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDF


13/22

Jurisdiction

It's also important to specify what jurisdiction will apply to the NDA

you'll draft and send to be signed in the event of the need for court

intervention.

An example of a clause that provides for jurisdiction can be found

in an NDA from Harvard Business School(2):

(2) http://www.hbs.edu/newventurecompetition/Pages/default.aspx
http://www.hbs.edu/newventurecompetition/Pages/default.aspxhttp://www.hbs.edu/newventurecompetition/Pages/default.aspxhttps://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDF


14/22

(b) The validity, construction and performance of this Agreement shall be governed

and construed in accordance with the laws o _____________________ state applicable to connects

ade and to be wholly performed within such state, without giving effect to any conflict of laws

rovisions thereof. The Federal and state courts located in _____________(state) shall have sole and

exclusive urisdiction over any disputes arising under, or in any way connected with or related to, the

terms o this Agreement and Receiving Part, i consents to personal urisdiction therein; and ii waives

the right to raise orum non convenlonsor any similar objection.


15/22

Termination of relationship

You should also specify what you wish the other party to do with

any confidential information when your contractual relationship

ends or they leave your business.

You could require that the other party returns all originals and

copiesof the information back to you or destroy them within a

certain period of time and retain no other records or copies.


16/22

NDAs with Non-Compete,

Non-Solicitation


17/22

A non-compete agreement is a contract that prevents the other partyfrom later on competing with youfor a specific period of time and in

a certain geographic location.

A pure NDA normally only restricts unauthorized disclosures over

confidential information but it doesn't stop the use of the confidentialinformation once it has been disclosed.

One of the downsidesof a non-competing agreement though is that it

has to be reasonableas courts loathe to uphold something that comes

across as an unfair restraint on commercial competition.


18/22

An example of a combined non-disclosure, non-compete and

non-solicitation clauses can be found again in the Coca Colas

Agreement on Confidentiality, Non-Competition and Non

Solicitation(3):

(3) http://www.wikinvest.com/stock/Coca-Cola_Company_(KO)/Agreement_Confidentiality_Non-competition_Non-solicitation
http://www.wikinvest.com/stock/Coca-Cola_Company_(KO)/Agreement_Confidentiality_Non-competition_Non-solicitationhttp://www.wikinvest.com/stock/Coca-Cola_Company_(KO)/Agreement_Confidentiality_Non-competition_Non-solicitationhttps://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDFhttps://everynda.com/?utm_source=Article-11&utm_medium=PDF&utm_campaign=Presentations-PDF


19/22


20/22

Using the NDA in patents talks


21/22

A patent, and related business talks around a patent, can also be

combined with an NDA.

However, a patent could be paired very well with a trade

secretin certain circumstances.

You only have to reveal secrets at the time of the filing of your

patent application but not while the patent is in force.


22/22

trade secrets agreements v. ndas

Documents