The NDA stated that to trigger either party’s obligations, the disclosed information must be either marked as confidential at the time of disclosure, or be unmarked and treated as confidential at the time of disclosure and designated later as confidential by written memorandum identifying the confidential information. Years later, information which was not marked but was considered confidential was shared in a presentation. The written memorandum was never sent. The deal collapsed and one party used the other party’s “confidential” information. The (California) court held that the NDA did not apply to protect the information if the procedure set out in the agreement was not followed.
The authors conclude: “If an NDA has a marking requirement…a procedure to discuss and fix procedural errors should be instituted to prevent accidental disclosure of confidential information.”
- If the NDA has a marking requirement, it is most important to understand the procedures for marking, and to implement them. If the procedures are not followed, the NDA may not protect those pieces of confidential information since the mark is what determines if that document was confidential.
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