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What are the consequences of signing an NDA without expiration of confidentiality?

A company that wants to hire me for some consulting, asked me to sign a NDA without any limitation on the expiration on the confidentiality term.

They claim their lawyers insist on such terms, while I never encountered such conditions, typically they were between 3 to 5 years. I did made sure to narrow the protected field as much as possible, however the idea of having unlimited confidentiality terms bothers me.

What the possible consequences to signing such NDA?

8 Replies

R. Douglas Hulse
2
1
R. Douglas Hulse Entrepreneur
Co-Managing Principal at Select BioVentures, LLC
A contract with no termination is in violation of the law against perpetuities and is invalid. You might want to point that out to the company.
Michael Indrajana
2
0
Patent Attorney, Law Offices of Michael Indrajana ESQ.
It depends on the nature of the trade secret being disclosed here.

For example, if the trade secret involves a food recipe, holding it in perpetuity makes sense because some of the most famous food products still have trade secret protecting the ingredients/recipe to make them. Think Coca-Cola, KFC, Bush's Baked Beans, and you see why they want to have a perpetual trade secret.

It's also worth considering if you can categorize the different types of information, and set the NDA accordingly. For example, you should be able to use some portion of your work at the company as part of your portfolio/resume, without violating the terms of the NDA. If the confidential information is later covered in a patent, you should have no obligations to stay quiet either.

That being said and done, make sure the NDA does not contain any uncalled provisions such as non-compete and the like. I have seen sloppy NDAs that confuses itself for an employment/consulting agreement that have unreasonable non-compete clauses.


David Schwartz
1
0
David Schwartz Entrepreneur • Advisor
Multi-Platform (Desktop+Mobile) Rapid Prototyping + Dev, Tool Dev
I personally wouldn't sign an NDA as a consultant that doesn't have a time limit unless they propose to pay me in perpetuity. They're usually 3 years from the termination of the agreement (ie., last payment).
Steven Schkolne
0
0
Steven Schkolne Entrepreneur
Computer Scientist on a Mission
i often see NDAs that expire, but the confidentiality drifts on in perpetuity. here's some language to that effect (from the Cooley NDAhttp://www.cooleygo.com/documents/form-non-disclosure-agreement-one-way)

1. This Agreement will terminate five (5) year(s) after the Effective Date, or may be terminated by either party at any time upon thirty (30) days written notice to the other party. The Recipient's obligations under this Agreement will survive termination of this Agreement and will be binding upon the Recipient's heirs, successors, and assigns. The Recipient's obligations with respect to all Confidential Information will terminate only pursuant to Section 3.



Alex Eckelberry
0
0
Alex Eckelberry Advisor
CEO at Meros.io
Of course it should have an expiration date. But it's likely going to expire when the data becomes public anyway, right? Is that data likely to become public?

In the end, a business risk decision. Hard to give advice without knowing the particulars.
Neil Gordon
0
0
Neil Gordon Advisor
Board Member, Corporate Finance Advisor and Strategy Consultant
As Alex said, it's a business risk decision. Most of the companies that have asked me to sign NDAs didn't last as long as the expiration provisions of the contract.
Chris Murphy
1
0
Chris Murphy Entrepreneur • Advisor
Director of Corporate and Legal Affairs at E2open
More than likely it won't matter to you, so long as you don't disclose anything that hasn't become TRUE public domain (if it becomes publicly known through a breach, then it still may not qualify depending upon your particular language, just fyi). IMHO, anything longer than 5 years for information other than trade secrets is overkill, but that doesn't mean that some companies who haven't thought things through won't request/demand it.

Almost any information *other* than trade secrets becomes "stale" after a period of time, usually less than 5 years, and is no longer really valuable as confidential information. Trade secrets should remain under nondisclosure obligations indefinitely.
Stas Oskin
0
0
Stas Oskin Entrepreneur
CTO at eyecam
Thanks to everyone for their replies, especially those clarifying the legal aspects of such clause.

Your opinions are much appreciated.
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