The Transactional Lab

Confidentiality Agreements: More Unintended Consequences

, Corporate Counsel


When drafting and negotiating confidentiality agreements, both parties should be aware of potentially broad restrictions on their activities.

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What's being said

  • OOElias

    NDAs tend to work best when they concisely cover just what it says on the tin, i.e., include ‘utmost good faith,‘ ‘non-compete‘ and ‘non-circumvent‘ terms. That way, there‘ll be no scope for implied licensing etc and other forms of seepage, outwith the necessity for express provision

  • Craig Bohn

    I find "use restrictions" in an NDA an interesting situation, since it could be seen to make the NDA an implied license. However, many NDA forms expressly state that no license is being granted. Additionally, Confidential Information ("CI") is shared because the other party does need it. I challenge that the reasonable and acceptable uses exceed most "purpose" clauses, since every party must make business decisions in concert with technical decision, and those business decision uses may not be covered by a limited purpose.

    I find it better to stick to the purpose of an NDA -- an agreement to reasonably protect the CI from disclosure. I typically will agree to a "use restriction" that focuses on protecting the CI, such as "... will not use the CI in a manner that could reasonably be anticipated to result in disclosure of the CI."

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