Looking at your current NDAs, it is likely that they will apply indefinitely, probably in an employment context, or for a period of three years, probably in a subcontract or association contract. However, the duration of a non-disclosure agreement should not be a single provision and deserves critical consideration in the drafting of the agreement. “Trade secret” has the meaning given to this term in [insert reference to the legal definition of the State or the definition of the Uniform Trade Secrets Act]. All Protected Information will be protected by the Recipient under this Agreement for a period of one (1) year from the date of disclosure to the Recipient. All trade secret information will be protected by the recipient under this Agreement on an ongoing basis or as long as such information remains a trade secret under applicable law, whichever comes first. There is a difference between a deadline for the agreement itself and a deadline for the disclosure time. If a time limit is applied to the agreement itself, it means that the clock begins to tick from the date of the agreement, and not from the moment of disclosure. In DB Riley Inc v. AB Engineering Corp,[iv] the plaintiff asserted that the defendant acquired the plaintiff`s trade secret information and used that information to gain a competitive advantage despite an existing contractual agreement with the plaintiff that limited disclosure. [v] The U.S. District Court in Massachusetts ruled that the information obtained from the defendant was a trade secret. [vi] Despite this finding, the Court concluded that the trade secrets were not sufficiently protected by the applicant because he could not show that reasonable steps had been taken to maintain the secrecy. [vii] In support of this decision, the Court concluded that the Applicant had received a temporary confidentiality agreement to protect his trade secrets.

As a result, the applicant was unable to exercise “eternal vigilance” with respect to its trade secrets. [viii] Simply put, a non-disclosure agreement is a legally binding document that sets out the obligations of the person who receives confidential and non-public information to the person who discloses it. An NDA can be unilateral (in other words, it only requires the receiving party to protect the disclosing party`s confidential information) or it can be based on reciprocity (it requires each party to protect the other party`s confidential information). It`s also known as a confidential disclosure agreement or a confidentiality agreement, but the name of the document and the scope of what the document covers may vary depending on the context, type of transaction, and industry in which you operate. Non-disclosure agreements are designed to ensure that a defined universe of information exchanged between the parties is confidential and is not used for purposes other than those authorized by the NDA. Please note, however, that NDAs are not the norm in some contexts. For example, most venture capital firms (with the possible exception of those in the life sciences field) will not sign an NDA with an entrepreneur seeking financing in the United States. Compare this to this clause of a Microsoft agreement where the 5-year confidentiality period does not start from the date of the contract, but from the date on which the disclosure actually takes place: There are usually 2 types of periods for these agreements: indefinite or with a specified period. It is best to consider the law of the state in which the NDA is applied before completing an NDA.

Therefore, the development of each non-disclosure agreement requires careful consideration of the parties involved, the information to be protected, and the State in which the agreement is applied. It is clear that a one-size-fits-all size does not suit everyone. As mentioned earlier, it is important that you consider which jurisdiction applies to your non-disclosure agreement, as courts may interpret the terms of the agreement differently. Another factor to keep in mind is the risk of including other types of clauses that the courts may consider restrictive in your non-disclosure agreement. As some claim, information such as customer lists, marketing strategies, and pricing models can become obsolete after a few years anyway, so there`s no reason to argue for a perpetual non-disclosure agreement if you`re only dealing with ordinary confidential information. You may wish to have your confidential information disclosed by the receiving party to external employees or consultants (e.B. the receiving party`s lawyers) with a “need to know”, who are themselves required to maintain the confidentiality of your information. Your NDA may indicate that this obligation will continue over the long term (i.e., without a fixed termination date), but the markup you receive will limit the period to the duration of the agreement or to several years after the disclosure of the information. Before you insist on constant secrecy, ask yourself if the information you share will become publicly available in the future. For example, if you communicate that you have an exclusive supply contract with confidential terms, but you intend to disclose that partnership on your website within a few months of your fundraising round, there is no reason to negotiate an indefinite term. On the other hand, if you disclose information that you believe to be a trade secret, you may need to insist on an indefinite period of confidentiality, as trade secret protection applies as long as the information remains a trade secret. Keep in mind that the “term” of a confidentiality agreement may refer to either the duration of the confidentiality obligations or the duration of your information-sharing relationship with the counterparty.

Be sure to keep these two different schedules in mind when negotiating your NDA. The first consideration is whether the NDA is part of an agreement between an employer and an employee or between two business units. If the NDA is the first, the duration of the NDA should be adapted to protect only the legitimate business interests of the employer, as many states consider all parts of an employment contract, including an NDA, to be a business restriction. If the NDA is the last, the NDA can be enforceable for more than a year in an employment contract, as many states do not consider NDAs outside the employment context as trade restrictions. However, some States consider all non-disclosure agreements to constitute a trade restriction, regardless of the parties to the agreement, and therefore the duration of a non-compete agreement in those States may be considered a non-compete clause or a non-solicitation agreement. .