12 ways a non-disclosure agreement is misused
TRANSCRIPT
12 ways NDA can be
misused
Not truly “Mutual”
1
Bigger companies often insist that you use their NDA agreement.
But that NDA is normally drafted in their favor.1
Unsuitable terms
2
Check if the terms of the NDA are relevant
or appropriate to your situation.2
Overly extensive definition of Confidential Information
3
A definition that's overly extensive or vague may result in you
being bound and limited to secrecy on Company A’s
behalf for information that's not really confidential.
3
Disclosing information unnecessarily
4
A bigger company could propose a NDA agreement with a clause
that states that the Disclosing Party would own any ideas,
inventions or information relating to confidential information
disclosed.
Then the bigger company:
Could intentionally disclose confidential information that's
related to your intended product/service
And claim ownership over that information
4
Difficult marking procedures
5
Be very careful about any clauses in the NDA agreement that
require a certain procedure to be followed before information
can be considered confidential.
55
Assignment of IP rights
6
Third-parties and affiliates
7
The "Unlimited Testing" clause
8
If you allow an unlimited testing clause and don’t include a clause
that binds external parties to confidentiality and non-use of your
confidential information, then you could potentially give external
party the opportunity to reproduce a competing product/service.
8
Unsuitable terms
9
The "term" or "duration" clauses (1) of a NDA agreement
can be quite tricky.
Ensure that the term is reasonable for both your purposes.
9
(1) Link to https://everynda.com/blog/typical-duration-non-disclosure/
The "Residual" clause
10
A residuals clause (2) allows the Receiving Party of confidential
information to bypass the usual obligations of confidentiality and
non-use for general information and concepts that are
retained in one’s memory, including confidential information.
A residuals clause can be a too much of a risk
to allow into a NDA agreement.
10
(2) Link to https://everynda.com/blog/beware-residuals-clauses-your-nda/
The "Non-competition" and "Non-solicitation" clauses
11
Tread very carefully with these clauses as a bigger company - like
Company A in our examples - stands to benefit more
from these clauses.
11
The "Non-competition" and "Non-solicitation" clauses
11Governing law
and/or Jurisdiction
12
"Governing law" refers to the law that will apply to the NDA agreement
while "jurisdiction" refers to the court that you want to decide
your case in the event of a lawsuit.
12
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