Monday, November 3, 2014

Nondisclosure Agreement Example (NDA)

As mentioned in the Make It Big book, a mutual nondisclosure agreement (NDA) is useful for protecting intellectual property.  The book reviewed both one way and mutual nondisclosure agreements.  The NDA below is a mutual NDA.  Note that the “Confidential Information” term covers the areas discussed in the book. 

This NDA is also favorable toward the entity in that the term is essentially unlimited.  This may need to be negotiated.  In addition the state under “Miscellaneous” is noted as California.  This can be changed to suit the needs of the situation.  Other than that, this is a fairly standard NDA with few contentious terms or surprises.  Entrepreneurs have found this a useful agreement in cases where they like to share confidential information.
"Mutual non-disclosure agreements are critical for detailed partner discussions," says Marc Theeuwes, former Director Business Development, and now Consulting Associate Professor at Stanford, "they define the scope of what is to be discussed and help ensure that both parties take information exchange seriously and in confidence.  With that as a backdrop, partner and licensing discussions can happen more freely."
The book “Make It Big Crossing the Entrepreneur’s Gap” describes a number of areas of intellectual property that can be protected by this NDA. Defining the intellectual property areas important to the startup helps ensure sharing is done in a protected manner.  Discussions with outside parties are always a part of crossing the gap.  Having an NDA and an intellectual property list helps the entrepreneur team prepare for outside discussions and protect as much as possible.
************** Start Nondisclosure Agreement ***************
THIS MUTUAL NONDISCLOSURE AGREEMENT (this “Agreement”) is made and entered into as of the _____ day of ________, 20___ (“Effective Date”) between _____________________________________ (“Company”) a Delaware corporation, located at _____________________________________ and ____________________________ (“Entity”), a California corporation, located at ______________________________________________.
1.         PURPOSE.  The parties wish to explore a business opportunity of mutual interest and in connection with this opportunity, each party may disclose to the other certain confidential technical and business information which the disclosing party desires the receiving party to treat as confidential.
2.         “CONFIDENTIAL INFORMATION” means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including without limitation documents, prototypes, samples, plant and equipment), which is designated as “Confidential,” “Proprietary” or some similar designation.  Confidential Information may also include information disclosed to a disclosing party by third parties.  Confidential Information shall not, however, include any information which (i) was publicly known and made generally available in the public domain prior to the time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the disclosing party to the receiving party through no action or inaction of the receiving party; (iii) is already in the possession of the receiving party at the time of disclosure by the disclosing party as shown by the receiving party’s files and records immediately prior to the time of disclosure; (iv) is obtained by the receiving party from a third party without a breach of such third party’s obligations of confidentiality; (v) is independently developed by the receiving party without use of or reference to the disclosing party’s Confidential Information, as shown by documents and other competent evidence in the receiving party’s possession; or (vi) is required by law to be disclosed by the receiving party, provided that the receiving party gives the disclosing party prompt written notice of such requirement prior to such disclosure and assistance in obtaining an order protecting the information from public disclosure.
3.         NON-USE AND NON-DISCLOSURE.  Each party agrees not to use any Confidential Information of the other party for any purpose except to evaluate and engage in discussions concerning a potential business relationship between the parties.  Each party agrees not to disclose any Confidential Information of the other party to third parties or to such party’s employees, except to those employees of the receiving party who are required to have the information in order to evaluate or engage in discussions concerning the contemplated business relationship.  Neither party shall reverse engineer, disassemble or decompile any prototypes, software or other tangible objects which embody the other party’s Confidential Information and which are provided to the party hereunder.
4.         MAINTENANCE OF CONFIDENTIALITY.  Each party agrees that it shall take reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of the Confidential Information of the other party.  Without limiting the foregoing, each party shall take at least those measures that it takes to protect its own most highly confidential information and shall ensure that its employees who have access to Confidential Information of the other party have signed a non-use and non-disclosure agreement in content similar to the provisions hereof, prior to any disclosure of Confidential Information to such employees.  Neither party shall make any copies of the Confidential Information of the other party unless the same are previously approved in writing by the other party.  Each party shall reproduce the other party’s proprietary rights notices on any such approved copies, in the same manner in which such notices were set forth in or on the original.
5.         NO OBLIGATION.  Nothing herein shall obligate either party to proceed with any transaction between them, and each party reserves the right, in its sole discretion, to terminate the discussions contemplated by this Agreement concerning the business opportunity.
7.         RETURN OF MATERIALS. All documents and other tangible objects containing or representing Confidential Information which have been disclosed by either party to the other party, and all copies thereof which are in the possession of the other party, shall be and remain the property of the disclosing party and shall be promptly returned to the disclosing party upon the disclosing party’s written request.
8.         NO LICENSE.  Nothing in this Agreement is intended to grant any rights to either party under any patent, mask work right or copyright of the other party, nor shall this Agreement grant any party any rights in or to the Confidential Information of the other party except as expressly set forth herein.
9.         TERM.  The obligations of each receiving party hereunder shall survive until such time as all Confidential Information of the other party disclosed hereunder becomes publicly known and made generally available through no action or inaction of the receiving party.
10.       REMEDIES.  Each party agrees that any violation or threatened violation of this Agreement may cause irreparable injury to the other party, entitling the other party to seek injunctive relief in addition to all legal remedies.
11.       MISCELLANEOUS.  This Agreement shall bind and inure to the benefit of the parties hereto and their successors and assigns.  This Agreement shall be governed by the laws of the State of California, without reference to conflict of laws principles.  This document contains the entire agreement between the parties with respect to the subject matter hereof, and neither party shall have any obligation, express or implied by law, with respect to trade secret or proprietary information of the other party except as set forth herein.  Any failure to enforce any provision of this Agreement shall not constitute a waiver thereof or of any other provision.  This Agreement may not be amended, nor any obligation waived, except by a writing signed by both parties hereto.
12.       SEVERABILITY.  In the event any term of this Agreement is found by any court to be void or otherwise unenforceable, the remainder of this agreement shall remain valid and enforceable as though such term were absent upon the date of its execution.
IN WITNESS WHEREOF, the parties hereto have executed this Mutual Nondisclosure Agreement as of the dates written below.
Agreed by:                    Company                                          Entity
Name:        __________________________    ____________________________
Title:          __________________________    ____________________________
Signature:  __________________________    ____________________________
Date:         __________________________    ____________________________
************** End Nondisclosure Agreement ***************

Disclaimer:  Material provided herein is for illustrative and educational purposes only. If you require the use of these or similar documents, you should seek the advice of a legal attorney.