Presenting a live 90-minute webinar with interactive Q&A Enforceable Nondisclosure Agreements: Protecting Trade Secrets and Other Confidential Business Information TUESDAY, AUGUST 9, 2016 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Whitney Holmes, Partner, Dorsey & Whitney , Denver Katie Pfeifer, Of Counsel, Dorsey & Whitney , Minneapolis The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
Tips for Optimal Quality FOR LIVE EVENT ONLY Sound Quality If you are listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-961-8499 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.
Continuing Education Credits FOR LIVE EVENT ONLY In order for us to process your continuing education credit, you must confirm your participation in this webinar by completing and submitting the Attendance Affirmation/Evaluation after the webinar. A link to the Attendance Affirmation/Evaluation will be in the thank you email that you will receive immediately following the program. For additional information about continuing education, call us at 1-800-926-7926 ext. 35.
Program Materials FOR LIVE EVENT ONLY If you have not printed the conference materials for this program, please complete the following steps: Click on the ^ symbol next to “Conference Materials” in the middle of the left - • hand column on your screen. • Click on the tab labeled “Handouts” that appears, and there you will see a PDF of the slides for today's program. • Double click on the PDF and a separate page will open. Print the slides by clicking on the printer icon. •
Avoiding Common Pitfalls in Drafting Non-Disclosure Agreements Whitney Holmes, holmes.whitney@dorsey.com Katie Pfeifer, Pfeifer.Katie@dorsey.com Dorsey & Whitney LLP August 9, 2016 5
Non-Disclosure Agreements — Common Pitfalls CAVEAT • Presentation focuses on commercial applications – Preliminary to transaction • Mergers & Acquisitions • Public offerings – Throughout the transaction • Credit Agreements • Private placements • No focus on employment agreements or covenants not to compete 6
Non-Disclosure Agreements — Common Pitfalls Fundamentals Non-Disclosure Agreements (NDAs) a/k/a Confidentiality Agreements: • Critical component of business relationships in the information age • Often a prerequisite to opening discussions • Can also be a critical component of ongoing relationships • Invariably a balancing act 7
Non-Disclosure Agreements — Common Pitfalls Fundamentals NDAs frequently coupled with: • Letter of Intent/Auction Procedures • Debt Instruments and Offering Documents • Non-Circumvention Agreement • Non-Reverse Engineering Agreement • Non-Competition Agreement 8
Non-Disclosure Agreements — Common Pitfalls Practice Pointer: The Principal Principle Overarching Rule for Drafting NDAs: • Draft NDAs as carefully as you would a real estate deal, or understand the risks in failing to do so • There is limited interpretive case law on NDAs 9
Non-Disclosure Agreements — Common Pitfalls Top Pitfalls # 1 – Imprecision # 2 – Failing to Define the Deal # 3 – Beware Subjectivity # 4 – To Mark or Not to Mark # 5 – The Risks of “Legally Required Disclosure” # 6 – Where’s the Remedy? # 7 – Non-Use and Fiduciary Duties 10
Non-Disclosure Agreements — Common Pitfalls Imprecision #1 – Imprecision • A primary issue is defining the protected data • What is, and is not, “Confidential”? – Trade Secrets – Proprietary Information – Important Data 11
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) Sources Defining “Trade Secrets” • Federal Law – Defend Trade Secrets Act of 2016 (DTSA), which operates in parallel with state law (no preemption) • State Law – Uniform Trade Secrets Act (UTSA) • Common Law • Terms of the NDA (Private Ordering) 12
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) Reliance on statutes and common law can be risky • UTSA – Generally requires plaintiff to plead and prove damages or unjust enrichment – Although UTSA provides for equitable remedies (injunction) courts avoid equitable remedies in the absence of harm • DTSA – Also provides for injunctive remedies, but too soon to know whether courts will be more likely to grant injunctions in the absence of proven damages – Significant preconditions and limitations apply to the availability of injunctive remedies ( can’t prevent employment, evidence of threatened misappropriation required in some cases) • Other state law claims (breach of contract or duty of loyalty, for example) also frequently require proof of damages 13
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) Statutory Example – Colorado • Colorado is a UTSA state • Colorado defines “trade secret” by statute as “the whole or any portion or phrase of any scientific or technical information, design, process, procedure, formula, improvement, confidential business or financial information, listing of names, addresses, or telephone numbers, or other information relating to any business or profession which is secret and of value.” Colo. Rev. Stat. § 7-74-102. 14
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) The Colorado statute further provides that, in order for information to be deemed a “trade secret,” the owner “must have taken measures to prevent the secret from becoming available to persons other than those selected by the owner to have access thereto for limited purposes.” Colo. Rev. Stat. § 7-74-102. 15
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) • Similarly, the Texas Supreme Court has set out six non-exclusive factors for determining whether something is a “trade secret”: (1) degree known outside the business; (2) degree known by employees/others in the business; (3) measures taken to safeguard the secrecy; (4) value of the information to owner and rivals; (5) effort or money spent to develop; and (6) effort needed to acquire the information. 16
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) • NDAs can be broader than common or statutory law • By contract you can agree to protect data that is not otherwise protected 17
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) • Can default to everything being confidential: “ All information and data, received by RECEIVING PARTY (“RP”) from DISCLOSING PARTY (“DP”) in any form or format, is conclusively deemed to be Confidential Information, unless expressly excluded from Confidential Information by the specific terms of this Agreement .” 18
Non-Disclosure Agreements — Common Pitfalls Imprecision (con’t) • Key focus of a court is determining intent of parties • Consider an overt statement of intent 19
Non-Disclosure Agreements — Common Pitfalls Practice Pointer: Why Are We Here? • Draft for “Why Are We Here?”: “ The Parties intend for this NDA to protect from disclosure all the Confidential data, in any and every form, that will be delivered to Recipient, and any interpretation of this NDA is to be consistent with this clearly stated mutual intent .” 20
Non-Disclosure Agreements — Common Pitfalls Define the Deal #2 – Define the Deal • Typical language is that “Protected” or “Confidential” data is limited to evaluation of the “Transaction” or for a “Business Purpose” • But what do these type of terms mean? 21
Non-Disclosure Agreements — Common Pitfalls Define the Deal (con’t) • Martin Marietta Materials, Inc. v. Vulcan Materials Co ., 56 A.3d 1072 (Del. Ch. 2012), aff’d 68 A.3d 1208 (Del. 2012) – “Pre - merger discussions” NDA – Merger under discussion was one of equals 22
Non-Disclosure Agreements — Common Pitfalls Define the Deal (con’t) • Operative NDA language: provided that protected information was to be used “solely for the purposes of evaluating a Transaction” – Defined Transaction as “a possible business combination transaction … between [the parties]” • Ultimately, MM launched a hostile take-over bid 23
Non-Disclosure Agreements — Common Pitfalls Define the Deal (con’t) • Point of contention: What does “between” mean – A “business combination between” the parties or – A business combination “between the parties” • Chancery Court: both readings plausible, so ambiguous • Relied upon extrinsic evidence regarding drafting changes to the NDA 24
Recommend
More recommend
