NDAs & Evaluation Agreements

  • Nondisclosure/Confidentiality agreements
  • Evaluation agreements
  • Idea submissions

Before getting serious about any commercial arrangement, the parties typically need to share enough information to generate interest in a deal and to permit due diligence investigations to occur. Unfortunately, appropriate allocation and protection of rights during this preliminary phase of discussions is often lost in the zeal to start negotiations in earnest. Three kinds of problems occur with regularity - (1) no agreement is put into place before important information is exchanged; (2) a confidentiality agreement is cloned from a form used in some prior deal, with inadequate attention paid to the protections required in the current deal; or (3) the parties incorrectly assume that an already-existing nondisclosure agreement between them will "cover" the current discussions in an adequate manner.

Many confidentiality agreements in use today are woefully inadequate to address the needs of the parties at this critical stage of business relationship formation. Some companies have even begun including clauses in their standard forms that gut the most fundamental of the protections that most parties expect when executing a confidentiality agreement. And if the increasingly popular email legends concerning confidentiality are taken seriously, then it is apparent that many companies are not aware of the circumstances in which they can legally assert confidentiality.

Your trade secrets constitute some of your most valuable intellectual property. Not only do they deserve adequate protection, but you need to exercise care before receiving the trade secrets of others, in order to ensure that your own subsequent developments are not tainted by the intellectual property of others. Moreover, contrary to the starting assumption of the parties, who frequently have no intention of inventing new technology during a mere evaluation, new intellectual property can easily arise from a trade secret recipient in the form of feedback and suggestions. Yet few confidentiality agreements address the resulting intellectual property and those that do often dispose of the rights in ways that might surprise you.


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