NDA vs. Confidentiality Agreement: The One BIG Difference
When starting negotiations such as the joint development of technology, licensing know-how, or acquiring a going concern, it is common for one side to present a confidentiality agreement or a non-disclosure agreement before proceeding into detailed talks.
Whether you are presented with a document titled Confidentiality Agreement, or one titled Non-Disclosure Agreement (“NDA”), really means little. The only difference is the word choice: nondisclosure versus confidentiality – maybe even whether non-disclosure is hyphenated or not (seriously, the title really remains little). In effect, the agreements could provide substantially the same provisions as to how information is disclosed, shared, reviewed, exchanged, or received.
In my experience, agreements on the east coast tend to be labelled non-disclosure agreements, whereas the midwest seems to prefer the confidentiality label. Internationally, I have seen the agreements termed Confidentiality & Non-Disclosure Agreements, probably because such agreements tend to be more robust in having to consider the export of information and how information is shared with personnel located around the world. But, that’s just been my experience, you will see it many different ways.
When receiving one of these agreements (or any agreement for that matter), the best practice is to ignore the title – even ignore the section headings – and carefully read, understand, and analyze the entire agreement. Then, consider the title. The drafter could have called the document “Super-Secret Discussion Agreement” and the first section of the agreement “Secret Rule 1.” It really does not matter, unless you like to take a circuitous route on a straight path.
In reading the agreement, if anything strikes you as confusing or peculiar, you should discuss and revise the language so that your understanding is reflected in the agreement. Best practice would be checking with an attorney before executing the agreement, but that may not always be feasible, so here are a few things to keep in mind:
1. Why do you need to execute such an agreement?
2. What types of information will be disclosed?
3. How will the information be disclosed? Will it be exchanged?
4. How will you be able to identify information that is exchanged subject to the agreement, from public information, or information you might have already known?
5. Which employees, or types of employees, will be able to receive and review the disclosed information? What about advisory professionals? Contractors?
6. What happens to the information after talks conclude or breakdown?
7. Where and how can the agreement be enforced?
8. What happens if the agreement is breached? By me? By my consultants?
9. How are damages calculated and recovered?
If you find yourself in need of counsel, Fox Law is business-oriented in its approach to stalled negotiations, and takes pride in being able to deliver creative and pragmatic solutions that move the business forward.