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Non-Disclosure Agreements

Discussion in 'Electronic Design' started by Peter Thompson, Oct 8, 2005.

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  1. In relation to a new product.

    Is it standard practice for EE companies/consultants to provide a
    non-dislosure agreement prior to discusssing a new project or is it the
    requirement of the client?

    Are there any legal traps to be aware of?

    It may be necessary to visit more than one company to find a suitable

    Regards, Peter.
  2. probably, but
    that nasty highjacker sez

    or in

    some SED stuff.

  4. It's often a requirement of the client. There are also ethical
    constraints, both personal and professional (especially in the case of
    a licensed/licenced engineer).
    Depending on the agreement, sure. Many are sort of mutual
    non-disclosure for a reasonable period of time. A few are gawd-awful
    and might legally inhibit the consultant or design company from doing
    things they are currently doing at the moment-- in particular ones
    which mention products which may compete with products of subject
    company for x years into the future- how do you know what they are
    making, will be making a year from now etc? They should also protect
    items which the consultant discloses to the client- you want them to
    be able to 'spill the beans' a bit in discussing how they'd do the
    job, without undue fear you'll just take all their ideas to someone

    It should cover just cover items that are *disclosed* not things
    already known from other sources, not competition, etc. You also have
    to think about whether you want to specifically indicate items which
    are of a proprietary nature or if you want to consider all items to be
    Sure. You may be able to define the project sufficiently to narrow it
    down so you only need an NDA with the one you select. It's often not
    necessary to discuss every detail of a project to get a general idea
    of what it will take to implement it-- and it may not be all that new
    a concept to the consultant anyway.

    Best regards,
    Spehro Pefhany
  5. mike

    mike Guest

    The bad news is that the NDA protects the person with the biggest lawyer.
    The worse news is that you may not be able to get in the door without it.
    I had an interesting discussion with a LARGE company. Their agreement
    said, "we're glad to talk with you, but don't tell us anything you
    wouldn't want us to know/develop/compete/put you out of business...but
    you are not to know/discuss/develop/compete with anything we tell you".

    Hand another opportuntity to develop some simple hardware for an
    inventor. He wanted an open-ended NDA before he'd even tell me what it
    was. He went elsewhere.

    Wanted, Serial cable for Dell Axim X5 PDA.
    Return address is VALID but some sites block emails
    with links. Delete this sig when replying.
    FS 500MHz Tek DSOscilloscope TDS540 Make Offer
    Bunch of stuff For Sale and Wanted at the link below.
  6. Jim Thompson

    Jim Thompson Guest

    The best NDA is called a Mutual Non-Disclosure Agreement.

    It means basically, "I'll show you mine if you'll show me yours" ;-)

    BUT, we both agree not to divulge each other's intellectual property
    to those outside of the agreement for a period of... (typically three
    to five years), without compensation determined by contract, etc.

    Also it will include that each party continues to own his own IP and
    no license is granted to the other party without further agreements.

    Anything more involved than that, I say simply, "Shove it", and walk.

    They almost always come back with the simple approach.

    ...Jim Thompson
  7. And if they don't, good riddance!

    Best regards,
    Spehro Pefhany
  8. keith

    keith Guest

    That sounds like ours. The real purpose is to tell the
    client/contractor/customer *not* to tell us anything because we can't
    guarantee that someone somewhere in &large_company. isn't developing
    something that will compete with them. At the same time, we have
    information that must be divulged, in order to do business, that shouldn't
    go further.
    As would I. Be carefull of any such agreements. There are certain legal
    traps, particularly with patents.
  9. I read in that Peter Thompson
    Could be either. Generally, whether you are a consultant or a client, an
    NDA is your friend, because it removes vagueness in the relationship.
    There are always legal traps, but I don't know of anything that applies
    in general to NDAs.
    I don't know what you mean by that.
  10. I read in that Spehro Pefhany
    Of course. One would be stupid to sign an NDA without reading it! The
    best thing to do it to be pre-emptive. As soon as 'NDA' is mentioned,
    say, 'I always use my standard form of NDA. Here it is!'. Even better if
    you can say it's approved by some institution like IEEE.
  11. Do you have a link to it?

    Best regards,
    Spehro Pefhany
  12. I read in that Spehro Pefhany
    No, but I suppose a text version is not too long to post here. It is,
    however, a trifle wide!

    (1) My Company name and address and
    (2) Your company name and address
    The parties intend to enter into discussions with a view to potential collaboration between them relating to [define project closely] , whether
    such collaboration is proposed to be through contractual relations, joint-venture, investment, sale and purchase, use or licensing of know-how,
    patents and/or patent applications, or in any other form (in any such case, such discussions being the "Project"). In connection with the
    Project, either party (the "disclosing party") may from time to time disclose to the other party (the "receiving party") proprietary
    information, know-how, trade secrets, documents, information of a confidential nature and/or other information and documents which the
    disclosing party expressly designates as confidential ("Information", which shall include all such matters in whatever form(s) the same may be
    1. Each party hereby undertakes to the other that where it is the receiving party it will:
    a. hold the Information in confidence and not disclose or permit it to be made available to any person, firm, company or third party other
    than those of its employees or third parties who need to know the same solely for the Project;
    b. only use the Information for the Project: and
    c. ensure that each person to whom disclosure is made by it is fully aware in advance of its obligations of confidence under this
    The receiving party will be responsible in the event that any party to whom the receiving party has disclosed such Information breaches the
    terms of this Agreement.
    2. The above restrictions on use and disclosure shall not apply to any Information if and to the extent that such Information:
    a. is, at the time of its disclosure by the disclosing party, in the public domain, except where this has arisen as a result of a breach of
    the terms of this Agreement;
    b. was in the possession of the receiving party prior to its receipt from the disclosing party; provided that the receiving party shall
    have given notice to the disclosing party of such prior possession, the notice to include evidence of such prior possession, within 7 days of
    receipt of such Information from the disclosing party;
    c. is used or disclosed with prior written approval of the disclosing party; or d. becomes known to the receiving party from a third party
    not under an obligation of confidentiality in relation thereto and where the receiving party is not in breach of the terms of this Agreement.
    3. Any copies of the Information made by the receiving party (which shall only be made in accordance with the terms of this Agreement) shall
    reproduce the proprietary markings and any other legends contained thereon.
    4. The disclosure of any Information shall not constitute any warranty by the disclosing party as to the content, accuracy, completeness or
    fitness for Project thereof.
    5. Each party undertakes to the other that in all its dealings with the other it shall exercise the utmost good faith and the parties further
    undertake that they will not, whether directly or indirectly, seek to exploit at any time the opportunities of which they have been made aware
    by virtue of this agreement except in direct connection with the Project.
    6. Nothing in this Agreement shall grant to either party the right to make commitments of any kind for, or on behalf of, the other party without
    the prior written consent of the other party. Nothing herein shall grant, expressly or implied, any ownership right or license to use (except
    for the Project and in accordance with the terms of this Agreement) any Information.
    7. This Agreement shall not obligate or be construed to obligate either party to purchase any products from the other party or to obligate or be
    construed to obligate either party to enter into any other agreement with the other party for the Projects of any products from the other party
    or any other party. Neither party is obligated to develop, manufacture or deliver any product under this Agreement.
    8. Without prejudice to any other rights or remedies of the disclosing party, the receiving party acknowledges that
    (i) monetary damages would not be an adequate remedy for any breach by the receiving party of this Agreement;
    (ii) the disclosing party shall be entitled (in addition to monetary damages and without limiting any other legal remedy) to the remedies of
    injunction, specific performance and other equitable relief for any threatened or actual breach of the provisions of this Agreement; and
    (iii) no proof of special damages shall be necessary for the enforcement of this Agreement.
    9. This Agreement shall remain in force until the earliest of:-
    a. a further agreement which supersedes this Agreement being entered into between the parties in respect of the Project;
    b. termination of this Agreement by the parties in writing; or
    c. 3 years from the date of this Agreement provided that in any such case the provisions of this Agreement shall continue in force in
    respect of any Information disclosed prior to such termination.
    10. The effective date of this Agreement is the date affixed on the last page hereof by the party last signing this Agreement.
    11. All notices hereunder shall be given by letter addressed as shown at the end of this document or such other address as a party may designate
    in writing to the other:
    12. All Information and copies thereof (whether or not in hard copy form) shall be returned by the receiving party to the disclosing party or,
    at the option of the disclosing party, destroyed, within 5 days of receipt of a written request by the disclosing party for the return, or
    destruction, of such Information.
    13. This Agreement shall not be assignable, in whole or in part, by either party without the express written consent of the other party.
    14. This Agreement shall be governed by and interpreted in accordance with the law of England and Wales and the parties hereby irrevocably
    submit to the non-exclusive jurisdiction of the courts of England and Wales.
    IN WITNESS WHEREOF, the parties hereto have authorised the undersigned persons to execute this Agreement as the act and commitment of such

    Addresses for communication:
  13. PeteS

    PeteS Guest

    I've had to sign NDAs with IC manufacturers to use their parts before
    now, and I am sure others here have had the same experience.
    The ones that spring to mind for myself are QLogic, Broadcom, Mellanox
    and Intel. There were others, but those are the fairly recent ones.
    The NDAs were roughly patterned after John's sample above, with a
    specific clause permitting auditing of the confidential material by the
    IC mfr's authorised rep.

    I have been known to change the part(s) in a design because I (and/or
    my employer at the time) couldn't live with the NDA requirements.
    Admittedly, I wasn't making large volume products, but the loss of even
    a small design win can ultimately hurt if it's a proof of concept or
    early market product.

    Most of the mfrs are now quite reasonable in their NDAs.


  14. Jim Thompson

    Jim Thompson Guest

    Here's a random selection from my files.......


    made and entered into this 28th day of November, 2000, by and between
    xxxxxxx xxxxx, Inc., a California corporation, located at xxx xxx xxx
    xxx ), and Analog Innovations, Inc., a corporation with offices at 824
    East Cathedral Rock Drive, Phoenix, AZ 85048-6300 (“Analog

    1. Definitions. For purposes of this Agreement, “Information”
    shall mean the information provided by the disclosing party to the
    receiving party which relates to plans and information relating to the
    disclosing party’s products and/or services, which may include, but is
    not limited to, the following types of information or other
    information of a similar nature, whether written or oral: all
    documentation and other tangible or intangible information,
    discussions, flowcharts, or diagrams, relating to all or any portion
    of the disclosing party’s existing or prospective products and/or
    services; prospective new ventures; policies and procedures regarding
    the design, development, and distribution of goods and/or services;
    research methods and results; creative and programming tools,
    methodologies, techniques; the identities of customers, business
    partners, and/or suppliers (actual or prospective), and any
    information relating to their actual or prospective products and/or
    services; business practices, operational procedures, internal
    policies, and business plans; employment and contractor relationships;
    or consulting services.

    In order to be considered Information, written information
    must be identified at the time of the disclosure with an appropriate
    legend, marking, stamp or other identification on its face as
    Proprietary Information. In order to be considered Information, verbal
    or visual information shall be so identified at the time of said
    disclosure and the disclosing party shall notify the recipient in
    writing within thirty (30) days of the disclosure and specifically
    identify the Information previously disclosed. Magnetic tape, computer
    software or any other similar type of machine readable format shall be
    considered a verbal disclosure pursuant to this Agreement.

    Such Information excludes, however, any information that (1)
    has been or is obtained by the receiving party from a source
    independent of the disclosing party, (2) is or becomes generally
    available to the public other than as a result of an unauthorized
    disclosure by the receiving party or its personnel, or (3) is
    independently developed by the receiving party without reliance in any
    way on the Information or Materials provided by the disclosing party.

    “Materials” shall mean all memoranda, notes, records,
    drawings, manuals, disks, or other documents and media, including all
    copies, extracts, and summaries thereof, containing any Information or
    provided to the receiving party by the disclosing party with reference
    to this Agreement.

    2. Authorized Use. The Information and Materials are provided
    to the receiving party for the purposes of (1) discussions between the
    parties to explore the possibility of a business relationship, (2)
    negotiation of any definitive agreement to be executed, and (3) the
    performance of any business agreement between the parties (“Authorized

    3. Limited Use. The receiving party acknowledges that it is to
    be given access to the Information and Materials solely for purposes
    of Authorized Use. The receiving party agrees that, except as
    expressly authorized by the disclosing party, it (1) will not use the
    Information, (2) will keep the Information confidential at all times,
    and (3) will not copy or modify the Materials, or any copy,
    adaptation, transcription, or merged portion thereof. The receiving
    party shall limit its disclosure of the Information and Materials to
    employees within its own organization whom the disclosing party could
    reasonably expect to have a legitimate need to receive such
    Information and Materials in order to accomplish the Authorized Use.
    The receiving party is specifically prohibited from revealing any of
    the Information to any third parties who may be competitors or
    potential competitors of the disclosing party.

    4. Proprietary Protection. The disclosing party shall have
    sole and exclusive ownership of all right, title, and interest in and
    to the Information and Materials, including ownership of all
    copyrights, patents and trade secrets pertaining thereto, subject only
    to the rights and privileges expressly granted by the disclosing

    The Information is considered to include valuable trade
    secrets of the disclosing party. The receiving party acknowledges
    that, in the event of any breach of this Agreement, the disclosing
    party will not have an adequate remedy in money or damages. The
    disclosing party, therefore, shall be entitled in such event to obtain
    an injunction against such breach from any court of competent
    jurisdiction immediately upon request, without the necessity of
    posting a bond, even if otherwise normally required. The disclosing
    party’s right to obtain such relief shall not limit its right to
    obtain other remedies.

    5. Disclaimer. Except as may otherwise be set forth in a
    signed, written agreement between the parties, the disclosing party
    makes no representation or warranty as to accuracy, completeness,
    condition, suitability, or performance of the Information or
    Materials, and the disclosing party shall have no liability whatsoever
    to the receiving party resulting from its use of the Information and

    6. Term. The obligations of the recipient shall terminate five
    (5) years after the date of this Agreement. Upon the earlier of the
    disclosing party’s request or the completion of the Authorized Use,
    the recipient shall promptly return or destroy all Materials and
    discontinue all further use of the Information. Upon the disclosing
    party’s request, the recipient shall promptly certify that such action
    has been taken.

    7. General. The interpretation and enforcement of this
    Agreement shall be governed by the laws of the State of California in
    the County of Orange, California, as it applies to a contract
    executed, delivered, and performed solely in such state. The receiving
    party may not sell, transfer, assign, sublicense, or subcontract any
    right or obligation hereunder without the prior written consent of the
    disclosing party.

    8. Arbitration. Any controversy or claim arising out of or
    relating to this Agreement or the breach thereof shall be settled by
    arbitration in Orange County, California, administered by the American
    Arbitration Association in accordance with its Commercial Arbitration
    Rules, and judgment on the award rendered by the arbitrator may be
    entered in any court having jurisdiction thereof. The arbitrator may
    award monetary damages, punitive damages, injunctive relief,
    rescission, restitution, costs and attorney’s fees. The arbitration
    award shall be final and binding regardless of whether one of the
    parties fails or refuses to participate in the arbitration. The
    arbitrator shall not have the power to amend this Agreement in any
    respect. Notwithstanding the foregoing, the parties agree that this
    Section does not apply to the breach of provisions pertaining to
    confidentiality and proprietary rights, and that either party may
    petition a court of law for injunctive relief and such other rights
    and remedies as it may have at law or equity against such breaches.

    9. Attorney’s Fees. The prevailing party in any action sought
    to enforce or interpret this Agreement or any provision thereof shall
    be entitled to recover attorneys’ fees and costs in conjunction with
    such legal proceedings.

    IN WITNESS WHEREOF, the parties have caused this Agreement to
    be executed as set forth below.

    By: ___________________________________

    By: ___________________________________

    ...Jim Thompson
  15. Phil Hobbs

    Phil Hobbs Guest

    I work for another LARGE company, and we do the same thing--for the
    simple reason that we can get in extremely deep yogurt if we include
    anybody's proprietary info in a product without a license. We're much
    more amenable to disclosing ours than to receiving anyone else's.


    Phil Hobbs
  16. [ snipped but noted ].

    Thanks to Spehro Pefhany for answering all my concerns and clearing the air
    and to Jim Thompson and John Woodgate for their fine examples and hammering
    home the need for the NDA's to be mutual NDA's. Excellant!

    Thinking about it logically, though, with so many new (or rehashed) ideas
    being presented to companies on a regular basis would they really have the
    time to persue each and every one to their advantage. I am sure you see many
    new product ideas only to think I wish I had thought of that and left it
    that and others you would think wouldn't make the light of day.

  17. At this stage I have only seen web sites and phone number for EE's. I may
    start discussions with the first to find out they are too busy or too big or
    they don't have the experience in my design area. There are some EE's in
    this group who I am sure are very good in say analogue but are a bit lost
    when it comes to embedded design.

    I may have to shop around to find the right company but in the meantime I
    have spilled the beans so to speak. Spehro mentioned to speak in general
    terms at first till I find the right mix.

  18. keith

    keith Guest

    Exactly. Though I've been in negotiations with others who don't trust
    that attitude. In one case, the contractor hired a big law firm in DC to
    "protect" them. It took them so long to read the contracts and to deal
    with our lawyers that the window was closed before anyone could make a
    dime. :-(
  19. It surprises me that you would volunteer the second half of this paragraph,
    about destroying all Materials. That is always what causes us the most

    Firstly, if we actually do any work on the project (as opposed to just
    discussing the possibility) then we want to keep at least one copy of
    everything forever. How else do you defend your design if some issue comes
    up later, if you no longer have all the information you were originally
    supplied with?

    Secondly, from a practical point of view it is impossible to destroy all
    copies. Unless we take special steps, anything that enters the office ends
    up in electronic form and will persist on backup tapes forever.

    Does your agreement really mean that you return or destroy all copies, or
    does it just apply to the actual physical Materials that have been supplied
    to you and not copies you have made (in which case it seems a bit
  20. I've seen similar language in contracts between a previous employer and
    several subcontractors. From a practical standpoint, it is impossible to
    ensure that all copies have been destroyed or returned. But from a legal
    standpoint, it eliminates the subcontractors' ability to submit evidence
    that they could use in their defense against their client. If they find
    a copy, they are in violation of their contract. Even documentation
    submitted to federal regulators for certification purposes are to be
    returned upon completion of their review.

    I always thought that our legal department got their experience working
    for the mob.
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