“ Protecting the Crown Jewels: Trade Secrets and Non-Disclosure Agreements” Part II By John L. Watkins And Thomas L. McLain Contact : [email_address] or [email_address]

Protecting the Crown Jewels: Trade Secrets and Non-Disclosure Agreements Part II: Non-Disclosure Agreements

Disclaimer This presentation is for informational purposes only. The presentation is based on general principles of Georgia law as of the date the of preparation (March 20, 2009). Georgia law is subject to change, and the law may differ in other jurisdictions. Reviewing or downloading this presentation does not create an attorney/client relationship with the authors or their law firm, Chorey, Taylor & Feil, A Professional Corporation. The authors and their firm provide legal services only pursuant to written engagements. Legal advice must be tailored to the particular circumstances and the applicable law. Those seeking legal advice should consult an experienced attorney in their jurisdiction.

This presentation is for informational purposes only. The presentation is based on general principles of Georgia law as of the date the of preparation (March 20, 2009). Georgia law is subject to change, and the law may differ in other jurisdictions. Reviewing or downloading this presentation does not create an attorney/client relationship with the authors or their law firm, Chorey, Taylor & Feil, A Professional Corporation. The authors and their firm provide legal services only pursuant to written engagements. Legal advice must be tailored to the particular circumstances and the applicable law. Those seeking legal advice should consult an experienced attorney in their jurisdiction.

Why NDAs Are Important NDAs help protect trade secrets Show reasonable efforts made to maintain secrecy NDAs can also protect information that may not qualify as a trade secret Often a substantial gray area as to what qualifies as a trade secret

NDAs help protect trade secrets

Show reasonable efforts made to maintain secrecy

NDAs can also protect information that may not qualify as a trade secret

Often a substantial gray area as to what qualifies as a trade secret

Why Not Just Pull One Off the Internet or Re-Use a Form? Different applications ( i.e. , employee vs. potential business partner) require different considerations Law differs and may affect enforcement What works in one situation may not work in another After all, it’s only your business

Different applications ( i.e. , employee vs. potential business partner) require different considerations

Law differs and may affect enforcement

What works in one situation may not work in another

After all, it’s only your business

NDAs: Potential Applications Employees Consultants Actual and potential customers Actual and potential suppliers Potential business partners Potential party to a transaction (mergers and acquisitions)

Employees

Consultants

Actual and potential customers

Actual and potential suppliers

Potential business partners

Potential party to a transaction (mergers and acquisitions)

NDAs: Key Provisions Unilateral or mutual Definition of “confidential information” Specific or general Exceptions to confidentiality Duration Of NDA Of confidentiality requirement Dispute resolution provisions

Unilateral or mutual

Definition of “confidential information”

Specific or general

Exceptions to confidentiality

Duration

Of NDA

Of confidentiality requirement

Dispute resolution provisions

NDAs: Unilateral or Mutual Unilateral NDAs protect only one side’s confidential information May be appropriate for employees or consultants May not be appropriate for companies in or considering a business relationship Many “forms” are unilateral

Unilateral NDAs protect only one side’s confidential information

May be appropriate for employees or consultants

May not be appropriate for companies in or considering a business relationship

Many “forms” are unilateral

Definition of Confidential Information Definition is usually broadly stated Sometimes all information is confidential Sometimes information developed from confidential information is itself confidential Some agreements have a requirement of stamping information as “confidential” Or identifying information in writing as confidential A party’s interests will often determine its preferences Another reason why “one size fits all” does not work

Definition is usually broadly stated

Sometimes all information is confidential

Sometimes information developed from confidential information is itself confidential

Some agreements have a requirement of stamping information as “confidential”

Or identifying information in writing as confidential

A party’s interests will often determine its preferences

Another reason why “one size fits all” does not work

Exceptions to Confidential Information NDAs typically provide that certain information is not “confidential” Information in the public domain Information known by the receiving party Information received from a third party under no condition of confidentiality And sometimes others

NDAs typically provide that certain information is not “confidential”

Information in the public domain

Information known by the receiving party

Information received from a third party under no condition of confidentiality

And sometimes others

Typical Obligations Use information only for specified purpose Share only with those with a need to know who are also bound to maintain confidentiality No disclosure to third persons Use reasonable measures to maintain confidentiality

Use information only for specified purpose

Share only with those with a need to know who are also bound to maintain confidentiality

No disclosure to third persons

Use reasonable measures to maintain confidentiality

Duration Duration of the NDA Normally a term of years Sometimes with a right to terminate by notice Duration of the confidentiality obligation after termination of the NDA

Duration of the NDA

Normally a term of years

Sometimes with a right to terminate by notice

Duration of the confidentiality obligation after termination of the NDA

Obligations After Termination Most NDAs continue the confidentiality obligation for a period after termination Usually: confidential information for a period of years Trade secrets: So long as they remain a trade secret Time period used in NDA often differs based on the business considerations Many NDAs provide for the return or destruction of confidential information upon termination or written demand

Most NDAs continue the confidentiality obligation for a period after termination

Usually: confidential information for a period of years

Trade secrets: So long as they remain a trade secret

Time period used in NDA often differs based on the business considerations

Many NDAs provide for the return or destruction of confidential information upon termination or written demand

Dispute Resolution NDAs may contain provisions regarding resolving claims and disputes May require that claims be brought in a particular jurisdiction May require binding arbitration instead of court proceedings These provisions are often not given adequate consideration in negotiations

NDAs may contain provisions regarding resolving claims and disputes

May require that claims be brought in a particular jurisdiction

May require binding arbitration instead of court proceedings

These provisions are often not given adequate consideration in negotiations

Other Considerations NDAs often include topics that extend beyond the deemed scope of an NDA Intellectual property protection (invention assignment; work for hire) Non-competition, non-solicitation Non-disparagement Protection of work force

NDAs often include topics that extend beyond the deemed scope of an NDA

Intellectual property protection (invention assignment; work for hire)

Non-competition, non-solicitation

Non-disparagement

Protection of work force

Other Steps IT Department should be involved in implementation Passwords and other protections Monitoring unusual activity Excessive or unusual copying or downloading of files Accessing information not related to job Accessing data at unusual hours Virtual Data Rooms Used for exchanging and monitoring confidential information in transactions

IT Department should be involved in implementation

Passwords and other protections

Monitoring unusual activity

Excessive or unusual copying or downloading of files

Accessing information not related to job

Accessing data at unusual hours

Virtual Data Rooms

Used for exchanging and monitoring confidential information in transactions

Other Steps HR Department and possibly employment counsel should be involved with employee NDAs: Implementation of NDAs and related employment provisions Monitoring enforcement, including during exit interviews

HR Department and possibly employment counsel should be involved with employee NDAs:

Implementation of NDAs and related employment provisions

Monitoring enforcement, including during exit interviews

Steps for Employees Maintain copies of NDAs and employment agreements Review agreements, with counsel if necessary, prior to leaving Get a clear understanding and permission about any information that is to be taken Do not assume that because you created it, you can take it!

Maintain copies of NDAs and employment agreements

Review agreements, with counsel if necessary, prior to leaving

Get a clear understanding and permission about any information that is to be taken

Do not assume that because you created it, you can take it!

Conclusion Thanks for listening In the next podcast, we will cover litigation of trade secret cases

Thanks for listening

In the next podcast, we will cover litigation of trade secret cases