Foundations of IP Strategy

You are going to be sharing information only verbally, so the current definition wouldn’t apply to the disclosure you are going to make and that you want to protect. In other words, you have to be careful about how the term confidential information/trade secrets is defined in the clause. You should consider amending this clause to ensure that the secret information you share verbally is protected. Alternatively, you could modify your approach and commit to writing all of the information you want protected.

The duration of protection is likely too short. The term has to be long enough to give you adequate protection. In reviewing a provision that defines how long the information will be maintained as confidential, careful consideration should be given to the applicable term of protection. For example, some experts suggest that you stipulate a finite term of protection for information you deem to be appropriate to protect your confidential information, given its nature and the nature of your industry (for example, two to five years are common benchmarks) and then you identify, separately, what your trade secrets consist of and stipulate that, with respect to your trade secrets, the term for protection lasts for as long as the information remains a trade secret.

You might want to be careful about agreeing to warranties in the NDA or agreeing to other ancillary obligations.

For example, a warranty of this kind can be dangerous because you often cannot be sure that an invention or other materials you are relying on do not infringe on someone else’s IP rights. Agreeing to such a commitment can create unnecessary liability for you. Another common provision that you might want to be careful about is one that says that you will not sue the other party, even if they are infringing on your patents or other forms of IP (commonly known as non-assert clauses). Generally, it is preferable to negotiate these sorts of provisions in transactional documents other than NDAs where you can spell out the details of these obligations and potentially limit your exposure through more balanced commercial terms.

You would be right to be concerned about delineating how revenues will be shared between the parties in an NDA.

Typically, NDAs do not cover important commercial rights and obligations such as payment obligations, indemnities, termination and so forth. These things should be addressed in transactional agreements that spell out the commercial rights and obligations and hence more exhaustively define the parties’ rights and obligations. These agreements may incorporate the NDA by reference so that it is clear that what is exchanged in the context of the commercial relationship is covered by confidentiality obligations.

You should make sure that you are signing the agreement with the party to whom you are making the disclosure (in this case, you are disclosing to Allegiant Inc. and not to Allegiant USA Inc., which is the party that is named in the NDA). You should also make sure that the person signing on behalf of the company has full authority to legally bind the company. In this case, the fact that a junior person is being asked to sign the NDA should be of concern to you.

If you are dealing with a company that has a multitude of entities, it is preferable for you to enter into the agreement with the party that has the most assets that you can go after, should there be a breach of the NDA.

You might also want to make sure that all of the affiliates of the entity that you are dealing with are covered by the NDA and that you have identified an appropriate recourse or recourses if any affiliate breaches the obligations of confidentiality.