Confidential Information

Question 1

T/F: Other things being equal, a one-way NDA is likely to be signed sooner than a two-way NDA.

Answer 1

False. A two-way NDA is more likely — but not certain — to be “fair and balanced” because the shoe might someday be on the other foot.

Question 2

T/F: A two-way NDA is probably safe to sign no matter which party you’re representing.

Answer 2

False: A two-way NDA might be drafted so as to favor one side or the other.

Question 3

Name one reason that a party that will be receiving confidential information might want all such information to be marked as such.

Answer 3

1. To alert the receiving party’s personnel that the information is subject to restrictions.
2. To establish that information that <em>isn’t</em> marked is fair game for use without restriction. <em>(A freedom-of-action clause can be useful for that purpose too.)</em>

Question 4

What are the Three Rules of protecting confidential information?

Answer 4

1. Lock it up.
2. Label it.
3. “Safe sex” – be careful <em>to whom</em> you give confidential information and <em>from whom</em> you receive confidential information. <em>(Did anyone see Grey’s Anatomy last week?)</em>

Question 5

FACTS: A receiving party is served with a civil subpoena to produce copies of the disclosing party’s confidential information.

QUESTION: To what extent should that fact operate to exclude the subpoenaed information from the definition of Confidential Information?

Answer 5

It should not be a violation of the NDA for the receiving party to produce the disclosing party’s confidential information in response to a subpoena — BUT:

A) The receiving party should be required to notify the disclosing party and cooperate – at the disclosing party’s request and expense – in any attempts to restrict further disclosure.

B) The information should NOT be categorically excluded from Confidential Information status just because of the subpoena.

Question 6

FACTS: A receiving party is served with a search warrant by federal prosecutors, who tell the receiving party not to disclose anything to the disclosing party.

QUESTION: What if anything should the receiving party do?

Answer 6

1. Don’t violate criminal statutes about investigations.
2. Put in the NDA that the receiving party doesn’t need to tell the disclosing party about third-party subpoenas, warrants, etc., if doing so would violate applicable law.

Question 7

QUESTION: From a disclosing party’s perspective, what are the three basic confidentiality obligations that an NDA <em>must</em> impose on a receiving party?

Answer 7

ANSWER:

1. Precautions to preserve the information in confidentiality.
2. No <em>disclosure</em> of confidential information without permission of the disclosing party (or as stated in NDA)
3. No <em>use</em> of confidential information without permission (or as stated in the NDA).