NDAs and “Trade Secrets”

Topic: NDAs and “Trade Secrets”

Speaker: Sufian Al Aswad (ICHEC)

HPC center: ICHEC, Ireland

Website: www.ichec.ie

Category of Best Practice: Legal


It is widely accepted that the value of most companies today lays primarily in their confidential and technical information, which come as serious challenge to industry R&D managers and research institutions alike. To address some of the challenges, we decided to apply a separate one-way NDA in addition to our SLA contracts. The NDA usually covers duration between 3 – 7 years. It is applied at the early stages of the engagement to enable exchange of sensitive information between the partners. We apply the term ‘Trade Secrets‘ to all private and restricted information disclosed by our commercial partners.
Sample clause:
“Confidential Information” means all data or information of a confidential nature and designated as such in writing by the Discloser, relating to the Project or business activities of the Discloser.

  1. In consideration of Discloser making the Confidential Information available to the Recipient, the Recipient agrees that it will:
    (a) Take all actions necessary to keep confidential the Confidential Information supplied by Discloser;
    (b) Not disclose the Confidential Information supplied by Discloser to any third party, corporation or other person whatsoever without the written consent of Discloser.
  2. The Parties agree that the obligations of confidentiality shall not apply to that part of the Confidential Information which:
    (a) At the time of disclosure is information already generally available to the public;
    (b) Is independently received from a third party having a bona fide right to use or disclose it;
    (c) The Recipient can demonstrate by written record was developed by the Recipient independently of the disclosure of Confidential Information by Discloser.

While NDA’s are common, they are not all the same. In fact, they are as varied as the needs for which they are created in the first place. Its advised to take a little time to think through the reasons why the NDA is needed in the first place and customise it to meet the specific needs of the engagement. Here are some of the lessons we learned:
Choose the Agreement There are two basic types of NDAs: one-way and two-way. One-way NDAs protect only the information of one of the parties. These are generally used when information is flowing from only one direction (usually the industry partner). Two-way NDAs are designed to protect the confidential information of both parties. We highly recommend the one-way NDA for its ease of implantation, usually two-way agreements take longer to secure since the university is equally paranoid about what can they share and their ability to safe keep the client’s secrets which brings us to the next point:
Most NDAs identify categories of information as confidential. To help keep things clear – it is best to limit the disclosed information. When receiving information, it is important to remember that in practice the information will need to be shared among the staff and in some cases the PhD students. In our experience, we draft our NDAs with a particular clause requiring the information to be disclosed in a “need-to-know” basis to staff, students if required, as long as the individuals are aware of the confidential nature of the information and are also under equivalent obligations to keep it in confidence.
Another tip we found is to take note and agree on the choice of law and jurisdiction defining the applicable law and jurisdiction is extremely useful in agreements in case a dispute arises, particularly in those agreements within cross-border partnerships. Although most of our client’s do have base in Ireland, we find ourselves faced with agreements sighting USA or UK laws – which causes a headache to our tech transfer office.
In summary, let’s not forget, that NDAs are just a Piece of Paper. Even though its best practice to always have a good, signed NDA prior to receiving sensitive, confidential information, the first step is to establish mutual understanding and trust between the partners before rushing forward with the legal paperwork. This somewhat helps the decision makers to take the steps needed to share sensitive designs, specifications, data and other trade secrets.

Info-links: http://forum.sesamenet.eu/index.php/forums/topic/confidentiality-in-the-sla/

Fact Sheet: NDAs-and-Trade-Secretpdf-icon