You receive multiple Nondisclosure Agreements (“NDAs”) for your business and they all look relatively the same; however, your attorney should review all of your NDAs because there are some dangers lurking. You would think that NDAs would be uniform, but they are not. Below are five things to look out for.
- Residuals Clauses – These are clauses that say the Recipient can reuse what is retained in their unaided memory. There are certainly situations where this is appropriate; however, they must be drafted properly.
- Assignment – The famous one-way assignment where only one party can assign the agreement. Do you really want your NDA assigned to your competitor? That doesn’t make sense to me.
- Independent Development Exclusion – Most NDAs have exclusions to what is confidential. Many times, the “independent development” exclusion is left out.
- Reverse Engineering – Did you know that by law reverse engineering is legal in certain circumstances? Therefore, you need to have a contractual “no reverse engineering” provision.
- Severability – There is some bad case law in my opinion that says if you do not have a severability provision in your NDA and one of the provisions is invalid, the whole NDA is invalid; therefore, you must have a severability clause.
The five items listed above are just a handful of things that your attorney looks for when reviewing NDAs.
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