Strategies for overcoming time-bound confidentiality obligations

In non-disclosure agreements, or any type of agreement that contains confidentiality provisions, clauses that terminate the confidentiality obligation after a period of time are common. "The obligations of confidentiality under this agreement expire five years after termination," for example.

I understand the arguments of those that defend such clauses: administrative convenience and finality; that most information should be expected to "go stale" after a 3 years or so anyway; and that it's better to use a separate agreement for true trade secrets.

I have clients that sell technically complex components for use in consumer products. The companies are large multinationals with massive engineering and legal teams. They are not patient about signing separate agreements, and in fact are quite allergic even to any proposed changes to their standard-form NDAs. And many of them, particularly OEMs based in Asia, routinely include time-bound provisions and refuse to remove them.

What's more, the nature of some of my clients' solutions is that business and technical discussions are inseparable. These clients will unavoidably need to disclose information that reveals trade secrets, at least in part, at the outset of the discussions.

A trade secret derives its protection from proof that the owner has exercised reasonable efforts to safeguard its secrecy. It would be trivially easy for an adverse party in any trade secrets litigation to discover and use the fact that the purported trade secret owner routinely signed time-bound NDAs, to potentially devastating effect.

Caselaw in this regard has not been kind to the trade secret owner. Convolve Inc. v. Compaq Computer Corp. (Fed. Cir. 2013) (failure to comply with NDA's written confirmation requirement kills trade secrets claim); DB Riley, Inc. v. AB Engineering Corp. (D. Mass. 1997) (NDA's 10-year time-bound torpedoes plaintiff's trade secret claim); ECT Int'l, Inc. v. Zwerlein (Wis. Ct. App. 1999) ("By limiting the period in which an employee agreed not to divulge trade secrets, ECTI manifested its intent that after one year there was no need to maintain the secrecy of any sensitive and confidential information Zwerlein learned while employed ….").

Given that my clients can't avoid disclosing trade secret information under a simple NDA under non-removable time-bounds, what strategies are available to overcome this problem?

Strategies and clause workarounds can be found at Redline (redline.net): http://redli.ne/2fsSAEn.

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