Trade Secret Protection
NDA
Table of Contents:
Special Treatment
Definitions
Extension of Term
Trade Secret Protection
NDAs often treat “trade secrets” as a special class of confidential information. A primary reason for this is to avoid any actual or constructive waiver of trade secret protection through the disclosure thereof, even under the auspices of an NDA.
Special Treatment
The parties can indicate the special nature and treatment of trade secrets under an NDA as follows:
Exemplar N26A-1
The protections afforded to Confidential Information under this Agreement are in addition to, and not in lieu of, the protections afforded under any applicable trade secrets laws.
Exemplar N26A-2
In recognition of the Parties' need to protect their legitimate business interests, each Party hereby covenants and agrees that it shall regard and treat each item of information or data constituting a Trade Secret or Confidential Information of the other Party as strictly confidential and wholly owned by the other Party and that it will not, for any reason or in any manner, either directly or indirectly, use, sell, lend, lease, distribute, license, give, transfer, assign, show, disclose, disseminate, reproduce, copy, appropriate or otherwise communicate any such item of information or data to any person or Entity for any purpose other than strictly in accordance with the express terms of this Agreement or any other written agreement between the Parties.
Definitions
To implement special treatment for trade secrets, the parties must agree on what they mean by a “trade secret.” The following exemplars employ standard and suitable definitions:
Exemplar N26A-3
“Trade Secret” means information, in any form, including, without limitation, the Applications, technical or non-technical data, research data, formulae, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, product plans, or a list of actual or potential customers or suppliers which is not commonly known by or available to the public, and which information (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Exemplar N26A-4
The parties Trade Secrets are confidential and protected under this Agreement. Trade Secrets include all information for which each party has taken reasonable measures to safeguard the secrecy of, are otherwise protected or designated as Trade Secrets. Notwithstanding the foregoing, either party may be immune from liability for disclosure of Trade Secrets if the disclosure is (i) in confidence to a government authority or an attorney to report a violation of law; (ii) as part of a lawsuit or case under seal; or (iii) to the party’s attorney or in a sealed filing in a case regarding retaliation.
The parties may also rely on statutory or common law definitions:
Exemplar N26A-5
"Trade Secrets" shall mean that portion of Confidential Information which constitutes trade secrets, as defined by applicable law and including, without limitation, confidential computer programs, software, designs, processes, procedures, equipment, data, reports, product specifications, formulas, improvements, on-line terminal designs, software applications and knowledge of the existence of any existing or proposed contracts with third parties, whether copyrightable or not.
Exemplar N26A-6
This Agreement and all rights and obligations hereunder will terminate and expire upon the earlier of (a) the execution of a definitive Sale Agreement with you and (b) three (3) years from the date hereof, provided that such termination will not relieve any party of liability for any breach occurring prior to such termination; provided, however, that with respect to any information contained within any Evaluation Material that constitutes a trade secret under any applicable state trade secret statute or the Federal Defend Trade Secrets Act of 2016 (collectively, the “Trade Secrets”), the restrictions on the use or disclosure imposed on you and your Representatives hereunder shall continue in effect thereafter for so long as such Trade Secrets remain trade secrets under any of such laws.
And as the following exemplar clarifies, loss of trade secret status does not mean loss of confidentiality protection under the NDA:
Exemplar N26A-7
Trade Secrets of the Disclosing Party shall be entitled to all of the protections and benefits available under applicable law, in addition to the protections and benefits provided under this Agreement to Confidential Information. If any information that the Disclosing Party considers to be a Trade Secret is found by a court of competent jurisdiction not to be a trade secret under applicable law, then such information shall still be treated as Confidential Information for purposes of this Agreement.
Extension of Term
Information that falls within the ambit of the definition of “trade secrets” is often afforded special or enhanced protection, including a longer period of protection.
In the following exemplars, the applicable protection term for trade secrets is perpetual or indefinite:
Exemplar N26A-8
Either party may identify to the other in writing any of its Confidential Information that it considers to be a trade secret, for which there will be a perpetual obligation of non-disclosure.
Exemplar N26A-9
Recipient's duty to protect confidential information disclosed under this Agreement shall extend for five years from the effective date of this Agreement and shall be extended for an additional five years if either party makes a written request for such an extension before the end of the first five-year period. Trade Secret information shall be maintained in confidence beyond the term of this Agreement.
Exemplar N26A-10
This Agreement shall become effective on the Effective Date set forth above, and shall terminate upon the occurrence of the earlier of (a) the expiration of thirty (30) days from receipt of notice by a party of its election, with or without cause, to terminate this Agreement; or (b) the expiration of twelve (12) months from the Effective Date of this Agreement. For a period of two (2) years from the termination or expiration of this Agreement, each party agrees to safeguard and hold in confidence, and to neither directly or indirectly disclose nor use, Confidential Information disclosed hereunder by the other. Notwithstanding the foregoing, there shall be no such time limitation with respect to Confidential Information that constitutes a “trade secret” under applicable laws. Accordingly, the obligation to safeguard and hold in confidence, and to neither, directly or indirectly, disclose nor use trade secrets shall survive the termination or expiration of this Agreement.
The following exemplars provide for an indefinite protection term for trade secrets that is coterminous with the information’s status as a trade secret:
Exemplar N26A-11
This Agreement shall become effective on the Effective Date set forth above, and shall terminate upon the occurrence of the earlier of (a) the expiration of thirty (30) days from receipt of notice by a party of its election, with or without cause, to terminate this Agreement; or (b) the expiration of twelve (12) months from the Effective Date of this Agreement. For a period of two (2) years from the termination of this Agreement, each party agrees to safeguard and hold in confidence, and to neither directly or indirectly disclose nor use, Confidential Information disclosed hereunder by the other. Notwithstanding the foregoing, such survival time period shall be indefinite with respect to any Confidential Information that is considered a trade secret under applicable law.
Exemplar N26A-12
The foregoing notwithstanding, nothing herein is intended to limit or abridge the protection of trade secrets under applicable trade secret law, and trade secrets shall be maintained as such until they no longer qualify as trade secrets under the law.
Exemplar N26A-13
This NDA will terminate three (3) years after the Effective Date and each Party’s obligations hereunder will survive termination of this NDA for three (3) years. This NDA may be earlier terminated by either Party at any time upon thirty (30) days’ prior written notice to the other Party. Any Confidential Information that constitutes a trade secret shall continue to be subject to the confidentiality obligations of the Parties hereunder for so long as such Confidential Information remains a trade secret under applicable law.
Exemplar N26A-14
With regard to each item of information or data constituting a Trade Secret, the covenant in the immediately preceding sentence shall apply at all times during a Discussion and for as long after the cessation of a Discussion as such item continues to constitute a trade secret under applicable law; and with regard to any Confidential Information, the covenant in the immediately preceding sentence shall apply at all times during a Discussion and for three (3) years after the termination of a Discussion.
The following exemplars recognize loss of confidentiality protection due to loss of trade secret status based on acts and omissions of the trade secret owner only, and not to acts or omissions of the receiving party or third parties:
Exemplar N26A-15
This Agreement shall terminate three (3) years from the Effective Date, but may be terminated by either party giving thirty (30) days written notice to the other party. The obligations stated herein shall remain in effect for 3 years following the expiration or termination of this Agreement: provided any Confidential Information which constitutes a trade secret under applicable law, such confidential obligations shall survive the expiration or termination of this Agreement until such Confidential Information loses its trade secret protection other than due to an act or omission of the Recipient, its employees, agents, contractors, consultants or Affiliates.
Exemplar N26A-16
The rights and obligations of the parties under this Agreement expire one (1) year after the Effective Date; provided that (a) notwithstanding any termination or expiration of this Agreement, Recipient’s obligations with respect to the Confidential Information of Disclosing Party under this Agreement shall expire two (2) years following the termination or expiration of this Agreement; and (b) with respect to Confidential Information that constitutes a trade secret under the laws of any jurisdiction, such rights and obligations will survive such expiration until, if ever, such Confidential Information loses its trade secret protection other than due to an act or omission of Recipient or its Representatives.