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Do you need an NDA?

Be careful with confidentiality agreements

Many researchers will be familiar with the following run of words: “Hi Dr X, it was great to meet you last week and discover that we have a mutual interest in subject area Y. It looks like we could potentially collaborate on a project together. To proceed, you’ll just need to sign our company’s standard NDA, which I’ve attached.”

Is it really that simple? This column will focus on non-disclosure agreements or confidentiality agreements, particularly in the context of discussions about potential research partnerships. (I use the words ‘contract’ and ‘agreement’ interchangeably, as they mean the same thing.)

Not a formality

More than any other type of agreement, the NDA tends to be treated as a formality by business representatives of most organisations—one that doesn’t merit a great amount of scrutiny. The legal representatives on both sides will see things differently. We know that however short and simple it might be, the NDA is still legally binding and will impose strict obligations, even if the meeting only lasts an hour and nothing comes of it. 

Which begs the question, is the NDA necessary?

My colleagues will tell you that I’m the mirthless one who will insist we need a contract for everything. But with NDAs my first reaction is: prove to me that we need this. Just because you’re talking about doing a project together, doesn’t mean the discussion has to be legally bound by confidentiality. You shouldn’t need to disclose your secrets to decide if a project is viable.

But sometimes you do. You could be sharing details of intellectual property that you want to protect, or you could be showing them around your lab. Or you could have certain know-how and methodologies that inform your analysis, and want to have a frank discussion without worrying that the company might take your ideas.

Sense of purpose

The most important thing to consider when setting up an NDA is the purpose. Let’s say the company sends you their NDA and it reads: “The parties shall exchange confidential information solely for the purpose of engaging in discussions relating to a potential business cooperation between the parties.” 

That seems reasonable and benign, doesn’t it? I’ll let you in on a secret—they all say that. This generic sentence doesn’t leave us any the wiser as to whether we’re thinking about curing cancer or starting an engineering project.

What will the discussion be about? “The parties wish to disclose certain confidential information relating to the use of the company’s E-Z-find technology to self-diagnose coronavirus and the university’s methods of stratifying patients into risk groups” gives a much clearer idea of why everyone is around the table.

But we also want to ensure there’s a bit about engaging in discussions relating to a potential research project because what the NDA is not about is undertaking any joint project work; that is, a business collaboration. If you’re already at the point where you’re ready to do a bit of this kind of work together—even if it’s just for a few hours—then we might as well just skip the NDA and go straight to setting up the project agreement.

Set the timeframe

The other element to consider is the length of time involved. How long will the discussions go on for? It’s important to put a time limit here because I don’t want Bob from the company reminding me of the NDA we signed four years ago for a different project and realising that it’s still in force. (This is entirely possible if the purpose was generic.) It is therefore important to set a fixed time period—a year, say—to let the discussions go back and forth. You will need to remember this because if there is a breach of the agreement, the university will be sued.

The length of time during which confidentiality must be observed will depend on the nature of the information itself. Maybe you know that the information will be public in the next two years, or maybe you can’t envision how it would ever stop being confidential. That’s a discussion to have with your contracts officer. If the information is extremely sensitive, think carefully about whether it is appropriate to disclose it at all. There are remedies for a breach of confidentiality, but you cannot put the genie back in the bottle if it gets out.

If you’re meeting with a potential partner and you’re wondering if that conversation should have the legal protection of an NDA, talk to your contracts officer. We can help you clarify the purpose and nature of the information you want to receive or disclose. Once you’ve decided to go ahead, we can then put in place the right agreement to protect the university, you and your hard work. 

Stephanie Harris is a contracts manager at City, University of London. She writes here in a personal capacity

This is an extract from an article in Research Professional’s Funding Insight service. To subscribe contact sales@researchresearch.com