Non Disclosure Agreement Survey

This survey was conducted with the Business Law Center on Westlaw. Click below to see a 2-minute video showing how to use the BLC`s research library to find transactional privacy agreements (Recorded Webinar, Using the BLC to Find Transactional Non-disclosure Agreements). All but seven NOAs contained a clause recognizing insufficient damages to remedy a breach of the agreement and allowing the parties to seek an appropriate solution in addition to available remedies. The increasing standardization of NDA use clauses is correlated with recent court decisions interpreting these clauses. A 2012 Delaware Chancery Court decision found that even provisions “exclusively” limiting the use of confidential information to consider a proposed deal still act as a kind of virtual status quo clause and may impede future hostile transactions. In Martin Marietta Materials, Inc. v. Vulcan Materials Company, the court found that a provision, the use of confidential information limited to a “combination of cases between the parties” limits the parties` intention to limit the use of confidential information to the valuation of a friendly transaction (Martin Marietta Materials, Inc. v.

Vulcan Materials Co., 56 A.3d 1072 (2012) see also Legal Update, Martin Marietta: Dela Courtware of Chancery Holds Of Confiden Informationtial in B. A California court reached a similar conclusion and issued an injunction against a hostile offer based on the use of the confidentiality agreement (Depomed, Inc. v. Horizon Pharma plc, 2015 WL 7433326 (Cal). Sup. Ct. Nov. 19. Nov. 2015).) To identify current market practices, we interviewed 143 DRAs between January 1, 2014 and March 31, 2018, including 68 mutual NAs and 75 NAs. The most frequent time to agree was 24 months. An agreement remained in force for 120 months (the longest term) and one for only three months.

Twenty agreements did not contain a termination date, which involved an indeterminate period. Twenty-three others presented or implicitly presented the permanent survival of the NDA`s confidentiality rules. In light of these decisions, it is perhaps not surprising that we have seen increasing standardization in the NDA`s use clauses. The 2014 terms of use give a general idea of how confidential information should be used, but do not give a precise direction, as does the language in question to Marietta/Vulcan. An agreement provides for the use “related to your review of a possible negotiated transaction (SC 14D9| EX-99 (E) (7), OpenTable, Inc., June 25, 2014), another speaks of “discussions for and/or to evaluate a future business or transaction agreement (SC TO-T | EX-99 (D) (4), Adept Technology, Inc., September 23, 2015, also does not prohibit its use for other purposes. NDAs tend to be short, but it is unwise to treat them as a formality. In recent years, NDAs have often been the subject of litigation, particularly in Delaware courts, where such agreements have been reviewed, dissected and, in any event, treated as cumbersome and binding obligations. As decisions such as Martin Marietta and Depomed suggest, even seemingly red language can limit a party`s strategic options. An NOA usually begins to recite the parties` intention to exchange confidential information in order to evaluate a proposed transaction. The agreement then defines confidential information, defines the obligations created by receiving confidential information and lists acceptable uses to which the information can be provided. The majority of the majority (80%) of the non-status quo provisions that, for a period of time, prevent the recipient of confidential information from carrying out a transaction hostile to the unveiling party. agreements reviewed.

Delaware law governs most of it (62%) Of these agreements, an additional 22% were written in accordance with New York law.