Version: May 2023
Welcome to NDA.re, your ultimate destination for safeguarding your invaluable secrets and fortifying your progress. We are not just about templates; we provide an extensive playbook for successful Non-Disclosure Agreement (NDA) negotiations. Designed to empower you with vital knowledge and strategies, this playbook is a comprehensive guide to navigating NDA negotiations effectively.
The playbook delves into key areas such as the definition of confidential information, exclusions from confidentiality, the term of the NDA, obligations of the receiving party, and jurisdiction and governing law. Each topic is unpacked with clarity and depth to help you grasp the complexities of the negotiation process.
With NDA.re as your guide, you're well-equipped to venture into the world of NDAs with confidence and expertise. Remember, a well-negotiated NDA is the first and foremost shield in protecting your business secrets, and we're here to help you create the most robust defense possible.
Negotiation Position: Try to keep the definition as broad as possible to protect your information.
You might argue that a broad definition of confidential information is necessary due to the sensitive and proprietary nature of the information being shared. The definition could potentially include things like trade secrets, financial projections, and the very fact that negotiations are taking place. This could also extend to derivatives of the business information, such as financial projections prepared using confidential data.
Fall Back Position: If the other party insists on a narrow definition, you might specify certain types of information or documents.
If the other party is not comfortable with a broad definition, you might agree to list specific categories of information that are considered confidential. This can help ensure that your core confidential information is still protected. You might also consider a provision that covers any information disclosed prior to the signing of the NDA to prevent misunderstandings later on.
Red Line: Any definition that does not cover your core confidential information.
Your red line might be any definition that fails to cover key information, such as trade secrets or other business information that, if disclosed, could have severe consequences on your business. In this case, you might insist on provisions that provide for injunctive relief or an indemnity provision requiring the recipient of confidential information to pay the costs relating to the enforcement of the NDA.
Negotiation Position: Keep exclusions limited to prevent the other party from easily disclosing your information.
In this position, your objective is to have as few exclusions as possible in the NDA. This stance is primarily aimed at safeguarding your confidential information to the maximum extent possible. The fewer the exclusions, the broader the scope of protection for your confidential information, and the less leeway the receiving party has to disclose it without repercussions.
Fall Back Position: Accept exclusions that are standard, such as information that is publicly available or independently developed.
In the event that the other party insists on including exclusions, you might be willing to accept standard ones. Typically, standard exclusions comprise information already known to the receiving party, information that has entered the public domain, information received from a third party, and information independently developed by the receiving party. Agreeing to these standard exclusions can increase the chances of your NDA being upheld by a court, if it ever came to that, since they're seen as reasonable and fair.
Red Line: Any exclusions that would allow for easy disclosure of your sensitive information.
Your red line could be any exclusions that would make it easy for the other party to disclose sensitive information, such as trade secrets or other information vital to your business. For instance, an exclusion allowing the receiving party to disclose information received from a third party, even if it is identical to your confidential information, could be a red line if you have not thoroughly vetted it. You would also want to insist on prior notice and review—and the opportunity to redact certain confidential information—before any disclosure required by law by the receiving party.
Negotiation Position: Strive for a term that lasts as long as the information remains confidential.
This might be preferable for certain types of information, such as trade secrets, which do not lose their value over time. If the NDA is created for exploring a potential business relationship, it will normally have a short term of about one to five years. If the NDA is part of a larger ongoing agreement, then the term should be for the length of that agreement plus some period of time after the termination of the relationship (for example, another five or ten years).
Fall Back Position: Agree to a reasonable term length, such as 2-5 years, or until the information enters the public domain.
This is a common term length for many NDAs, balancing the need for confidentiality with practical considerations such as the difficulty of maintaining confidentiality over long periods.
Red Line: Any term that does not provide adequate protection for the lifespan of your confidential information.
This will vary depending on the nature of your information, but as a principle, any term that leaves your information unprotected for a significant portion of its useful life could be considered unacceptable.
Negotiation Position: The receiving party should be obligated to use the confidential information only for the agreed purpose and to keep it confidential.
This can be achieved through clear language in the NDA specifying the purpose of the disclosure and the requirement to maintain confidentiality. The receiving party should agree to limit access to the information to those who need to know it for the agreed purpose.
Fall Back Position: It might be acceptable for the receiving party to disclose the information to necessary employees or advisers, provided they are bound by similar confidentiality obligations.
This could be achieved by requiring the receiving party to ensure that anyone to whom they disclose the information is bound by confidentiality obligations at least as strict as those in the NDA. This can include provisions requiring the receiving party to take responsibility for any breaches by individuals to whom they disclose the information.
Red Line: The receiving party should not be allowed to disclose the information freely or use it for their own benefit without your consent.
This could be a clear deal-breaker. Provisions to watch out for include ones that would allow the receiving party to use the information for their own benefit, to disclose it without your consent, or to avoid liability for unauthorized disclosures.
Negotiation Position: The jurisdiction and governing law should be in your home country or state.
In an NDA, the governing law and jurisdiction provisions determine which country's or state's laws will apply to interpret the agreement and where any legal disputes will be resolved. From a negotiation perspective, your initial position might be to have the agreement governed by the laws of your home country or state. This is because you and your legal advisors are likely most familiar with these laws, and it would be most convenient for you to litigate any disputes in your home jurisdiction.
Fall Back Position: A neutral and convenient jurisdiction might be acceptable.
If the other party is uncomfortable with your home jurisdiction, a potential compromise could be to agree on a neutral and mutually convenient jurisdiction. This could be a third country or state that neither party has a particular advantage in, but that both parties find acceptable in terms of convenience, familiarity, and fairness of the legal system.
Red Line: A jurisdiction or governing law that would put you at a disadvantage.
Your red line might be agreeing to a jurisdiction or governing law that would put you at a significant disadvantage. This could be, for example, a jurisdiction where the other party has a home-field advantage, where you have no legal representation or where the laws are unfavorable to your interests.