Term Clause In Confidentiality Agreement

When it comes to ensuring that your confidentiality is maintained in the context of a legal challenge, the scope of the agreement is extremely important to help the courts determine whether the terms of your confidentiality agreement are appropriate or not. Confidentiality agreements, confidentiality agreements, confidentiality agreements — whatever their name, these ubiquitous and seemingly simple agreements are so prevalent in today`s business environment that many businessmen sign them without much. where appropriate, effective verification or reflection. One of the usual reasons for the superficial management of these legal agreements is that they often foreshadow a broader subsequent agreement, which will likely be subject to closer scrutiny. Also, depending on the story, the agreement lasts only 1 year (or 2 or 3). We`ve all seen them – confidentiality agreements with provisions that say something like, “The confidentiality obligations set out therein are valid one (one) year after the disclosure of confidential information.” On the surface, provisions like this seem useful, since they set the end of a company`s legal obligations under the agreement. This can be correct in many cases. But if trade secrets are leaked as part of the deal, these provisions are traps for the unwary. Here`s the problem: Valuable information can be protected forever as a trade secret – as long as the owner continues to make reasonable efforts to keep the information confidential. When a company transmits information to another company by means of a confidentiality agreement that has a fixed duration of confidentiality obligations – such as one year – it is likely that after this period, the information can no longer be protected as a trade secret. Since the recipient of this information is not required to keep the information confidential after the period indicated, it is unlikely that the courts will allow a company to assert that the information is a trade secret, even if the company sues an independent party for misappropriation of information.

The obvious answer to this situation seems to be the use of confidentiality agreements without a fixed term when it is possible to divulge trade secrets. But wait – it`s not that simple. Some States consider confidentiality agreements, without a fixed term, to constitute inappropriate trade restrictions when they apply to information which, although confidential, does not reach the level of a trade secret under existing law. If a confidentiality agreement of indefinite duration is used in these states and confidential trade secret information and confidential information is disclosed without a trade secret, a company risks having a court declare the agreement unenforceable, which would destroy the protection of trade secrets for all disclosed information. . . .