No Litigation Use
NDA
Table of Contents:
Notice
Infringement
Validity
No Litigation Use
Most parties may agree that an NDA should not be used as a vehicle for free discovery of information that can be used against the disclosing party for the benefit of the receiving party. An agreement by the parties not to use confidential information disclosed under an NDA for litigation and other adverse purposes is particularly useful to avoid intellectual property disputes or exacerbating them, including patent infringement actions, declaratory judgment actions, reexaminations, interferences, validity challenges, enforcement challenges, and ownership challenges.
The following exemplar generally prevents use of disclosed information in the connection with legal actions and proceedings adverse to the disclosing party:
Exemplar N16-1
Each party acknowledges and agrees that (1) the receiving party will not use the Confidential Information of the disclosing party, including the existence or content of discussions or investigations relating to a possible Transaction, for the purpose of, as a basis for, or in support of any Legal Action adverse to the disclosing party; and (2) each party will not file a Legal Action adverse to the other party that is based in whole or in part on Confidential Information disclosed to or discussed with a receiving party by the disclosing party pursuant to and in reliance of the disclosure and use restrictions set forth in this Agreement. For purposes of the foregoing, “Legal Action” means any administrative proceeding, judicial proceeding or similar proceeding, but excluding any action or proceeding to enforce the obligations under this Agreement.
Notice
Because knowledge or notice of intellectual property rights can lead to findings of willfulness and assessment of enhanced damages, the following exemplars prohibit the use of disclosed information for purposes of establishing such knowledge or notice:
Exemplar N16-2
In the event that Discloser discloses any patents, patent applications or any other Confidential Information related thereto, Discloser agrees that neither the disclosure of the patents, patent applications and related Confidential Information nor any discussions relating thereto is intended to be, will be construed as, or will be used as evidence or proof in any action against Recipient or its affiliates of (i) actual or constructive notice or knowledge of the patents or infringement of, or intent to infringe, the patents under any applicable patent laws, including with respect to theories of willfulness, contributory infringement or inducement; (ii) an allegation of infringement of any of the patents, or (iii) use by Discloser of any of the patents. The parties agree that any and all evidence of the patents and patent applications as disclosed under this Agreement, related Confidential Information and discussions relating thereto is and will be inadmissible as evidence in accordance with Rule 408 of the Federal Rules of Evidence and is not competent evidence in any form of litigation, other legal dispute or any other context.
Exemplar N16-3
Neither the disclosure of Confidential Information by the disclosing party to the receiving party nor the existence or content of discussions or investigations relating to a possible Transaction is intended to be and must not be used by the disclosing party as a basis for or evidence of (i) notice of intellectual property rights infringement (including but not limited to notice under 35 U.S.C. § 287), (ii) any accusation or assertion by the disclosing party of infringement, (iii) any admission by the receiving party of use or infringement, or as evidence that any later alleged infringement was willful or that any later alleged inducement of infringement satisfies the knowledge or intent elements of a claim for inducement of infringement.
Infringement
The following exemplar prohibits a party from using disclosed information as a basis for formulating and/or asserting a claim of infringement, subject to a carve-out for defenses and counterclaims:
Exemplar N16-4
Contractor and its affiliates and assigns shall not assert any patent claim in any jurisdiction against Company, any Company Affiliate or any of their respective licensees or assignees or end users (each a “Beneficiary”), alleging that any Company technology, software, service or interface or its interoperation with any third party technology, software, service or interface infringes any patent based on the Company’s software or process or any associated application program interface or protocol, any Update thereto, or any part or derivative thereof. Contractor and any affiliate shall be relieved from these restrictions where its patent claim is being asserted defensively in relation to a Beneficiary claim alleging Contractor infringes any patent rights and the Beneficiary does not withdraw the assertion within ten (10) business days of being notified by Contractor or its affiliate of this provision.
Validity
The following exemplar precludes the receiving party from using disclosed information to challenge the validity of the disclosing party’s intellectual property rights:
Exemplar N16-5
Contractor will not use any Confidential Information disclosed by Company to Contractor in connection with this Agreement to contest the validity of any intellectual property rights of Company or its licensors. Any such use of Company’s Confidential Information and data will constitute a material, non-curable breach of this Agreement.