Do NDAs Have Value?

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Clients often ask me for an NDA assuming that if they have an NDA in place with a third party their confidential information will be protected.  I typically caution clients that while having an NDA is prudent, NDAs only have value to the extent (1) the information the client intends to disclose is actually protectable (e.g., intellectual property or proprietary information not available to the public) and (2) the client is willing to invest resources to enforce its rights under the NDA, which could be expensive if litigation were needed to do so.

As a practical matter, recipients of confidential information often inadvertently or unintentionally breach an NDA’s confidentiality obligations.  With this in mind I often advise clients even with an NDA in place to be careful disclosing the company’s “crown jewels” or that critical intellectual property that is the foundation of the company’s value proposition.  In conclusion, while it is prudent to use an NDA when disclosing confidential information, a company should not assume that act alone will always be sufficient to protect its confidential information.

About Stuart Campbell

Stuart handles transactional matters primarily for emerging technology and other high-growth companies. He has particular focus in representing companies in the wireless, Internet and game spaces. He has extensive experience representing founders, investors and companies in: entity formation; over 150 venture capital and angel financings; mergers and acquisitions, including distressed acquisitions and 363 bankruptcy sales; joint ventures, strategic alliances, and technology transfer and licensing matters. Stuart also advises clients on corporate governance matters.
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