As we approach and move into a new year, I will write a few posts about common mistakes that can cause a loss of trade secret status.\u00a0 The beginning of a new year is a good time to think about ways that we can do better and avoid mistakes.<\/p>\n
The mistake I will discuss in this post ironically arises from a desire to mitigate risk.\u00a0 When drafting non-disclosure agreements (\u201cNDA\u201d), lawyers sometimes seek to provide their clients with certainty regarding which specific information is subject to a confidentiality restriction.\u00a0 The concern is that a broadly worded NDA covering all confidential information exchanged between parties can lead to later uncertainty regarding which information is subject to the NDA\u2019s restrictions.\u00a0 One party may believe a specific item of information was publicly available from other sources and, therefore, not subject to confidentiality restrictions.\u00a0 The other party may disagree.\u00a0 To avoid this situation, a lawyer drafting a NDA may include in the contract procedures designed to make it clear which information is subject to the NDA and which is not.<\/p>\n
For example, the NDA may require that all documents subject to the NDA be clearly labeled \u201cConfidential.\u201d\u00a0 The NDA might also require a party to issue a written notice specifying which orally transmitted information is subject to the NDA.<\/p>\n
In theory, these procedures make sense.\u00a0 After all, clarity is better than uncertainty.\u00a0 The problem, however, is that the lawyers often cease to be involved in the project at issue after their clients sign the NDA.\u00a0 The clients begin exchanging documents and information and forget to follow the designation procedures in the NDA.\u00a0 When this happens, the party disclosing proprietary information runs the risk of waiving trade secret protection over its information.<\/p>\n