The Non-Disclosure is one of the most important documents that begins all Intellectual Property transactions. Sometimes it is known as the ND, or the NDA – Non Disclosure Agreement or the NDNC – Non-Disclosure, Non Circumvent.
Your Non Disclosure Agreements should include a Non Circumvent Agreement. For this reason we will call it the NDNC or the NDA. Why is this important and what should the NDNC contain?
With so much litigation and Intellectual Property theft protection of your assets is important. It isn’t easy to steal protected property, but it is easy to steal ideas because they cannot to be protected. Most people are lazy about working with other writers and they tend to “trust” others. While working with other writers or partners “trust” is important, trust that you need to arrange the protection of property in all circumstances. If you think your idea or work is valuable, you need this agreement.
Many people use templates, regardless consider the following.
What is in the NDA?
The Parties, The Title or Working Capacity of the Person and The Contact Information
Every person should be identified in his or her capacity. If the signing parties are signing the NDA as an individual, it should be stated Joe Smith, as individual. If Joe Smith is signing as “Agent”, it should say Joe Smith, Agent for XYZ: if Joe Smith is signing as a member of a company entity, it should say Joe Smith, President of XYZ.
Why is this? Suppose Joe Smith signs the NDA as “Agent for” and acts outside for another company. The members of the new company may not be bound to the agreement. At the time of signing, Joe Smith is not in the legal capacity to sign the NDA for people he does not know. How do you do this? Make sure Joe Smith signs as his acting capacity and if he leaves his firm, have him sign another agreement. AND make sure there is s phrase to cover Joe Smith in all capacities.
Industry standard is three years. In the film business sometimes five years; why is this? Films take a long time to develop, produce, and come through postproduction with distribution. This process is usually three years if not longer. If a film enters a film festival, it might take even longer.
The Terms and Scope of the Agreement
The terms may or may not include a specific title of a property. We recommend both capacities in you NDA. Make sure the agreement covers the specific property and a general scope for what you permit each party to do or not do with the Intellectual Property.
Do not forget the official date of the agreement.
The Do Not Contact Parameters
NDAs should include the rules for contacting each party’s contact. This may include aspects like needing written permission, having no contact without written permission or arrangements particular to the circumstance. This is the Non-Circumvention of the agreement.
Exclusivity or Not
Are the parties exclusive to each other or is one party making an exclusive covenant to the other?
Some agreements involve the raising of money. Usually the parties have some understanding of what is going to be expected financially and this should be documented in the NDA.
The NDA may also state that no business may proceed by one party until the fee arrangements have been concluded. There may be a clause that states this NDA shall be followed by a formal Memorandum of Understanding, the MOU.
What geographical court has jurisdiction over the contract?
You can include a penalty clause in the event of breach.
You can include the type of dispute resolution if you want, but be careful with this. If you own the property and you are presenting the material, remember that the federal courts hear disputes of $250,000 or more or over subject matter of the courts. This litigation requires a lot of money and can deter a plaintiff. Therefore, be careful choosing the court of resolution because you may give away options to protect yourself.
Do not limit your dispute resolution options!
Return of Material
There should be a clause for the return of the material even if it is by email. It lends a certain termination to the use of the material.
Does the person signing have authority over the material? Make them state such under penalties of perjury.
Is the contract assignable to others? Usually not, the proper way to deal with this is to have each party take responsibility for themselves. No person can sign for another or lend their authority to another, except in companies, legally formed where an officer of authority can sign for the entity.
All pages should be acknowledged…period. Half of an agreement or a signature page is unacceptable. If for some reason, you cannot get the document to multiple parties, a “Counterpart” clause can be added. This Agreement has 3 Counterpart signatures and it should identify the parties. This way the entire agreement is acknowledged.
If you cannot get the NDA right, forget the transaction. It only gets more complicated.