As published in the June 26, 2013, issue of the Los Angeles Daily Journal by John St. Clair
Your business, Company Inc., has taken all reasonable actions to maintain the confidentiality of its trade secrets, has documented their value where appropriate, and requires other companies to which its trade secrets are disclosed to sign a confidentiality and nondisclosure agreement. Is Company protected against misuse or wrongful disclosure of the trade secrets? Not necessarily. Consider this example of an NDA not protecting Company’s trade secrets.
When Company entered into negotiations with Competitor Inc. about a potential joint venture, the companies entered into an NDA. The NDA included trade secrets in the definition of protected confidential information, so Company was protected against Competitor wrongfully using or disclosing Company’s trade secrets during the term of the NDA. While the term of the NDA is often heavily negotiated and is important, focusing attention on the term of the NDA may divert attention from an important related issue. In addition to ensuring that the NDA is not superseded by a subsequent agreement unless the NDA’s protections are included, Company should focus on what happens after termination or expiration of the NDA. [Read more…]