Other clauses and provisions one should consider including in a NDA are listed below:

• Choice of law provision
• Forum selection/choice of venue clause
• A clause requiring arbitration to resolve disputes
• A provision entitling a prevailing party to recover attorneys’ fees in certain situations
• A provision requiring departing employees to inform their future employers about the NDA
• A clause allowing the employer to assign the NDA to a successor, affiliate, subsidiary, etc., without employee consent
• A “tattle-tale” provision requiring an employee who becomes aware of any breach of the NDA to inform the employer of the breach
• A provision requiring an employee who is uncertain if particular information is within the NDA’s definition of confidential information to request a written clarification from the employer

NDAs should include provisions making the receiving party’s obligations explicit. At a minimum, a NDA should recite the receiving party’s obligations to maintain secrecy and limit the use of the confidential information. The NDA should also make explicit that the receiving party is prohibited from breaching the confidential relationship, inducing others to breach the confidential relationship or inducing others to acquire the confidential information by improper means.

An NDA should include a provision identifying the period in which the information must remain secret. The term in which confidentiality is to be maintained is negotiable. A term of 5 years is common in the United States, and a term of 10 years is typical in Europe but they vary and should be carefully thought out.

Not all confidential information is entitled to trade secret protection. For example, confidential information discovered prior to the creation of the confidential relationship, discovered independently and discovered by reverse engineering (i.e., by obtaining confidential information in the process of disassembling a publicly available product) is not entitled to trade secret protection.

Every NDA should describe the types of information to be protected in the agreement. Common categories of confidential information include formulas (recipes), patterns (designs, blueprints, and specifications), compilations (customer lists, data collections), programs (software and computer code), devices (physical machines and inventions), methods (marketing, advertising and business plans, planned product announcements), techniques, or process (chemical, mechanical and manufacturing processes). If you don’t do that you could be accused of trying to declare the location of the bathroom to be confidential information.

You would not believe how many firms have very good Non-Disclosure Agreements drafted up but which they never use. Or, worse, which they use sporadically. So, of course, the one key employee never signs her NDA and, because you did have one signed by some people, it looks like you agreed not to have her sign the NDA. Oops!

A lot of business comes my way from businesses and key employees fighting over whether or not the employee or (more usually) ex-employee can use/disclose things s/he learned while working. These disputes revolve around what is called a Nondisclosure Agreement or “NDA”. So I thought I would spend a few posts on the key Elements of a Nondisclosure Agreement which may help avoid future problems.

Large firms do have a lot of clout in the local, regional and (perhaps) national legal community. A nasty letter from a law firm with offices in 30 states may be more intimidating than a nasty letter from a solo practitioner. Unless, of course, the solo has a reputation for being a ferocious trial lawyer.

Big firm or small firm? Generally speaking, the larger the law firm, the greater the overhead, therefore the higher the hourly rates you will be expected to pay. If you use a solo practitioner or small firm as your lawyer(s), it’s likely that they will not have all the skills you may need to grow your business. No single lawyer does. So the solo or small firm lawyer will have to refer you out to someone they know and trust to do the job right. On the other hand, while a larger firm may have all the legal skills you need “under one roof,” you don’t know who they are or how good they are. Either way, though, you will have to consult several attorneys over time.

America’s judicial system is a lot like a Roach Motel–it’s easy to get into court, but very difficult to get out once you’ve been “trapped.” While nobody likes to deal with attorney, let alone paying attorneys’ fees, the fee a lawyer will charge to keep you out of trouble is only a small fraction of the fee a lawyer will charge to get you out of trouble once it’s happened.