The first part is the period during which the disclosure must occur for the information disclosed to be considered “Confidential Information.” This deals with the risk that someone receives information long after the discussions ceased, but the other side then contends it is confidential under the agreement. Usually, I use a term of one year for our business, but I’d want to look at business practices for each business before making that decision.

The second part of the term is the duration of confidentiality for information that was disclosed during the term. Here, I usually say that the obligations last as long as the information remains within the definition of confidential information. That definition comes pretty close to the definition of a trade secret, with the exception that I don’t require it to be vlauable. I don’t think I’ll ever be enforcing the agreement for valueless information, so I have a hard time seeing a situation in which a court would invalidate the agreement as anticompetitive.

I’m leaning towards changing my form, out of an abundance of caution, limit the duration of protection to the maximum allowed by state law, if that is less, for information that is not a trade secret.

That said, I’ve tried to avoid the jurisdictions where I knew they made that kind of distinction. (I never allow Georgia law to govern, for example.) Does anyone know if there is a reliable list?

Chris

Jeffy: No argument that when you’re not dealing with trade secrets, in most circumstances the likelihood of damages drops off precipitously over time. But what’s more important is that courts are inclined to hold that perpetual confidentiality periods are unenforceable. Also, as I suggest above, it’s neater to be able to say that a given agreement is definitively over.

Ken

If we limit the term (other than for trade secrets), we either have to do so from the date of the agreement (e.g., January 1, 2008 to December 31, 2013) or we have to have a continually rolling term from the date of disclosure. Most of my NDAs are for ongoing business relationships. That causes problems with both of those options. In the first setup, I could have CI disclosed on November 30, 2013 and it’s only protected for a month.

In the second structure, I could receive CI today and still have to treat it confidentially 15 years from now (because I received additional CI later under the same NDA), or rely on one of the standard exceptions. I’d rather my colleagues be absolutely vigilant for (at least) N years from the date of disclosure and not have to worry about making an inquiry (or defending a claim) about whether the materials have or haven’t fallen out of the definition.

Are you proposing that the agreement has different terms (duration terms, not rights/responsibilities) for each disclosure, or were you just contemplating discrete NDAs for discrete (no pun intended) disclosures?

Also, I’m not sure about giving the agreement a perpetual term but limiting the confidentiality obligations. You might be giving with one hand then taking away with the other.

Ken

- for trade secrets, for as long as it constitutes a trade secret under the Uniform Trade Secrets Act;
- for CPI, in perpetuity unless statute provides a shorter term;
- “other” confidential information for N years from the date of disclosure.

This is pretty close to what Ken was writing above, but rather than limiting the agreement by term, we (try to) avoid the unenforceability issue by limiting only specific obligations by time.

Also, I think there are four standard exceptions to confidentiality: publicly available other than from breach, received from another source not (known to be) in breach, independently developed and previously known. I know Ken likes cutting as much chaff as possible, but those exceptions would be glaring in their omission and, in fact, are subject to occasional negotiation (for example, whether a recipient has to know if another party disclosing CI to it is doing so in breach of a confidentiality obligation).