When two companies might exchange confidential information a non-disclosure agreement (NDA) is useful. However, many companies have a standard template that is “unilateral”…in other words it imposes obligations on the other party but not on itself.
Unilateral NDAs frequently go through a painful (and expensive) round of legal review. This is often entirely unnecessary if both parties would simply agree to the same terms. For that reason we’ve been using this Mutual Non-Disclosure Agreement for years. We’ve typically forwarded a blank Word document at our client’s request. However, to make things easier we’ve made it into an Adobe PDF that is form fillable and added it to our intellectual property form library.
This is a useful “first tier” agreement for the initial exchange of information. However, if the two parties start collaborating on ideas then some additional complexities may arise.
For example, if (during the collaboration) Company A improves technology patented by Company B. Then Company A might patent the improvement but would need a license from Company B to practice the invention as a whole. Company B would still own the patent to the original invention but would need a license from Company A to practice the improvement. Without an agreement to handle this both companies can get into a standoff and the inventions go nowhere. I call these “second tier” engagements and at this point you need another agreement on how to handle intellectual property generated jointly. In those cases we typically have the parties agree as follows:
- Ownership: each company owns what it invents;
- License: an invention stemming from collaboration is owned by the inventing company which grants a royalty free, world-wide, non-transferrable (unless with entire business), in-perpetuity license to the other party to practice the new invention.
It is critical to get out ahead of these issues before they become a problem. While non-attorneys might find this NDA useful, Smith & Hopen cannot warrant it will cover every liability or issue that may arise. If you have something valuable to protect, call us first and get some guidance on how to proceed.