Editor's Choice

PDA is great, NDA is vital

May 17, 2009 

James Forrest is a corporate attorney with the Morrisville office of Moore & Van Allen, a Charlotte-based law firm.

I'm never more than 10 feet away from my personal digital assistant. My PDA consistently arms me with up-to-date information that I'm interested in (world news, legal resources, sports scores, store hours, phone numbers, blogs and so forth).

As well, with a few keystrokes, I can communicate promptly with clients, friends and family via phone, e-mail, text or instant messenger. Basically, when I have my PDA with me, I'm king -- and wherever I and my PDA happen to be at the time is officially world headquarters.

Also, the PDA helps me make other people think that I'm developing that elusive virtue of patience. I can magically stand in lines and sit in waiting rooms with less visible frustration. Without my PDA, well -- that is simply a different story. I feel instantly disconnected with the world, electronically naked, panicked that I'm going to fail to respond promptly to a client concern, and virtually non-relevant.

If I had to pick one thing that should be as important to companies as my PDA is to me, it is a proper Non-Disclosure and Confidentiality Agreement (otherwise known as the NDA).

NDAs protect proprietary and confidential information from unauthorized disclosure in a variety of contexts. For example, if information regarding your company's technology or product is communicated to another company in an effort to evaluate whether a strategic alliance or joint venture is appropriate, an NDA can curtail the risk that the other party will disclose or commercialize the sensitive information to your company's detriment.

NDAs can also deter your employees from disclosing proprietary information to third parties, both during employment and for a time afterwards. As well, vendor relationships often necessitate an NDA in that a company often reveals proprietary information to the vendor in order to receive the vendor's services or products. Overall, NDAs minimize the risk that important company information will be disclosed to unauthorized recipients.

A few important things to focus on when creating, evaluating or reviewing an NDA:

Pay attention to exactly what information must be kept confidential. Most NDAs define "confidential information." To the extent disclosed information falls within that definition, it may not be disclosed to third parties. Ensure that your company's most sensitive information is specifically included in the definition.

Notice how long the sensitive information must be held in confidence. A typical NDA term can range from two to five years. Often times, the term depends on the life cycle of the technology being disclosed. It is not abnormal, however, to see NDAs require that the disclosed information be held in confidence in perpetuity, or at least until the disclosing party notifies the receiving party that the information may be disclosed. Generally, these types of requirements are enforceable.

Make sure the NDA protects your company's information. Many NDAs only protect one party's information, particularly where NDAs are designed for your own employees. Other NDAs state that each party must safeguard the proprietary information of the other party in a reciprocal fashion. I've observed oversight and confusion regarding this issue from CFOs and executive vice presidents on several occasions. The one-size-fits-all-NDA approach can be problematic.

Lastly, evaluate the "forum provision" that determines where any litigation related to the NDA must be brought. If your company is based in North Carolina, and you enter into an NDA that contains an Alaska forum provision, the likelihood of your company's suing the other party for unauthorized disclosure is reduced.

Incorporating NDAs into your corporate processes is a fundamental building block of corporate risk management strategy. Go ahead and reach for your closely held PDA and set up a meeting with your team to ensure that you are placing appropriate value on NDA protocol. Then enjoy a nice game of BrickBreaker.

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