US-Uk Non-disclosure agreements
Discussion
I had an unsolicited email from a guy who had picked up my details from Linkedin about prduct development. After an intial discussion he agreed to send me product details and sent me a NDA to, effectively, fill in my name and email it back. He then send me details of his product.
I have no intentions of stiffing him on this but I did wonder what power such an agreement carried, given the fact That I hadn't actually signed it by doing anything more than inserting my name in a word document, and the fact he was in the US anyway, so I was unsure which countrty he could enforce it in.
He'd try to enforce in the USA. Technically he could try to extradite you if something in his opinion went wrong, and could actually manage it if he convinced the right judges.
If it were the other way round you'd have little recourse but to sue in the states. The only people who would win would be lawyers.
If it were the other way round you'd have little recourse but to sue in the states. The only people who would win would be lawyers.
as always it depends on the wording in the contract, but usual position would be that it is governed by US law (a particular state) and if you breached he would bringan action in that court. you could try to move the action across to the UK, and might succeed if the contract is silent on this. wherever he got judgement (assuming he did) then he could enforce against you in the UK (although if it was US judgement it would be more expensive).
this is all pretty usual for a US-UK NDA and they would question why you would want to amend it if you did.
No reason why inserting names on a standard document and signing it wouldn't be effective (am assuming you were asked to physically sign it). If you didn't sign it, then he'd be hard pushed to get anywhere against you (although may depend on the US law being used and I'm not a US lawyer).
simple solution - don't breach the NDA.
this is all pretty usual for a US-UK NDA and they would question why you would want to amend it if you did.
No reason why inserting names on a standard document and signing it wouldn't be effective (am assuming you were asked to physically sign it). If you didn't sign it, then he'd be hard pushed to get anywhere against you (although may depend on the US law being used and I'm not a US lawyer).
simple solution - don't breach the NDA.
I've allways taken the view that I will walk away long before ever contemplating signing a NDA.
Unless it has be structured by you then it will almost certainly be a mine field that could hang around for a very long time.
A few points:
If an NDA is required then it is a concept which can be copied by anyone and so has few barriers to entry. This makes it a poor product to start with.
NDA disputes are, like many, legal disputes, resolved by who has the deepest pockets, thus if both parties wave their willys around at the outset you will be able to see who would win and make any descisions without need for lawyers.
But the really toxic element of a NDA is that a couple of years down the line after nothing came of the first deal, a third party comes along with the same idea and works with you, you have long forgotten about the time wasting muppet from the States (as most people who demand NDAs indeed are) and then, wham, out of the blue you are being sued for breach of some worthless agreement that you signed and forgot about.
In essence, the majority of the time and NDA document is an excellent indicator that someone is about to completely waste your time.
Unless it has be structured by you then it will almost certainly be a mine field that could hang around for a very long time.
A few points:
If an NDA is required then it is a concept which can be copied by anyone and so has few barriers to entry. This makes it a poor product to start with.
NDA disputes are, like many, legal disputes, resolved by who has the deepest pockets, thus if both parties wave their willys around at the outset you will be able to see who would win and make any descisions without need for lawyers.
But the really toxic element of a NDA is that a couple of years down the line after nothing came of the first deal, a third party comes along with the same idea and works with you, you have long forgotten about the time wasting muppet from the States (as most people who demand NDAs indeed are) and then, wham, out of the blue you are being sued for breach of some worthless agreement that you signed and forgot about.
In essence, the majority of the time and NDA document is an excellent indicator that someone is about to completely waste your time.
I get involved in NDAs a lot - in my industry (hi tech electronics) they're usually to do with trying to prevent information falling into competitors hands before a product is publically released, rather than any stunning technological innovation. I think the basis is that if the issuer wanted to sue anyone for nicking their idea then they have to be able to show that the information wasn't in the public domain. They can achieve this by only releasing information under NDA.
Generally, most customers just sign them. The opinion in our industry is that they're not worth the paper they're written on. In 20 years I've never heard of legal action being taken after an alleged breach.
Where we do come unstuck is larger companies refer NDAs to their legal department who then start making all sorts of changes. They always change the juristiction to English law from US. Some US companies will accept this, some won't. One thing that happens quite a lot is a potential customer will reject our NDA but ask us to sign their NDA instead. Usually that's OK.
Another thing that I think is somewhat ridiculous is that no-one ever checks the status of the person signing - sometimes a fairly low ranking person will sign them and everybody accepts that, when they really ought to be signed by an officer of the company.
Generally, most customers just sign them. The opinion in our industry is that they're not worth the paper they're written on. In 20 years I've never heard of legal action being taken after an alleged breach.
Where we do come unstuck is larger companies refer NDAs to their legal department who then start making all sorts of changes. They always change the juristiction to English law from US. Some US companies will accept this, some won't. One thing that happens quite a lot is a potential customer will reject our NDA but ask us to sign their NDA instead. Usually that's OK.
Another thing that I think is somewhat ridiculous is that no-one ever checks the status of the person signing - sometimes a fairly low ranking person will sign them and everybody accepts that, when they really ought to be signed by an officer of the company.
Edited by Deva Link on Tuesday 7th April 09:38
It is a product based on his PhD work. I have no intention of trying to walk away with his ideas as without him it would be very difficult to produce the final product anyway. He sent me his unpublished PhD which was the subject of NDA.
It has rather focussed the mind on the problems of dealing with other jurstrictions like this. He had offered some sort of partnership deal in development using our expertise in product development and his in this specific type of product, but to be frank, if enforcing our part and getting our share from US income meant a trip through the US courts he will have to look elsewhere for a partner.
The one thing we could do is to agree a split based on my right to produce and sell in the UK and Europe and his in the rest of the world. That way, we are not dependent upon one another in the future and the only dispute could be 'turf wars'. The market is big enough for two fairly small operators, unless he sold it to a larger entity who wanted to invade Europe. I think then that the cost of repelling them would lead me to pack it in or rename/change the product.
Brown and Boris said:
It is a product based on his PhD work. I have no intention of trying to walk away with his ideas as without him it would be very difficult to produce the final product anyway. He sent me his unpublished PhD which was the subject of NDA.
Well, if he's sent you the information already then the NDA is a bit of moot point! You could say it's a trap but in my experience it's an indication of how lightly they regard NDAs.Brown and Boris said:
It has rather focussed the mind on the problems of dealing with other jurstrictions like this. He had offered some sort of partnership deal in development using our expertise in product development and his in this specific type of product, but to be frank, if enforcing our part and getting our share from US income meant a trip through the US courts he will have to look elsewhere for a partner.
The one thing we could do is to agree a split based on my right to produce and sell in the UK and Europe and his in the rest of the world. That way, we are not dependent upon one another in the future and the only dispute could be 'turf wars'. The market is big enough for two fairly small operators, unless he sold it to a larger entity who wanted to invade Europe. I think then that the cost of repelling them would lead me to pack it in or rename/change the product.
It would be really difficult (ie expensive) to take on a company in the American courts. We have contracts that aren't particularly favourable but we just recognise that it all goes pear-shaped then we just walk away and move on. Has happened a couple of times. In theory European law offers some protection but it's just not worth it for small companies.The one thing we could do is to agree a split based on my right to produce and sell in the UK and Europe and his in the rest of the world. That way, we are not dependent upon one another in the future and the only dispute could be 'turf wars'. The market is big enough for two fairly small operators, unless he sold it to a larger entity who wanted to invade Europe. I think then that the cost of repelling them would lead me to pack it in or rename/change the product.
Edited by Deva Link on Tuesday 7th April 15:12
Deva Link said:
Brown and Boris said:
It is a product based on his PhD work. I have no intention of trying to walk away with his ideas as without him it would be very difficult to produce the final product anyway. He sent me his unpublished PhD which was the subject of NDA.
Well, if he's sent you the information already then the NDA is a bit of moot point! You could say it's a trap but in my experience it's an indication of how lightly they regard NDAs.Brown and Boris said:
It has rather focussed the mind on the problems of dealing with other jurstrictions like this. He had offered some sort of partnership deal in development using our expertise in product development and his in this specific type of product, but to be frank, if enforcing our part and getting our share from US income meant a trip through the US courts he will have to look elsewhere for a partner.
The one thing we could do is to agree a split based on my right to produce and sell in the UK and Europe and his in the rest of the world. That way, we are not dependent upon one another in the future and the only dispute could be 'turf wars'. The market is big enough for two fairly small operators, unless he sold it to a larger entity who wanted to invade Europe. I think then that the cost of repelling them would lead me to pack it in or rename/change the product.
It would be really difficult (ie expensive) to take on a company in the American courts. We have contracts that aren't particularly favourable but we just recognise that it all goes pear-shaped then we just walk away and move on. Has happened a couple of times. In theory European law offers some protection but it's just not worth it for small companies.The one thing we could do is to agree a split based on my right to produce and sell in the UK and Europe and his in the rest of the world. That way, we are not dependent upon one another in the future and the only dispute could be 'turf wars'. The market is big enough for two fairly small operators, unless he sold it to a larger entity who wanted to invade Europe. I think then that the cost of repelling them would lead me to pack it in or rename/change the product.
Edited by Deva Link on Tuesday 7th April 15:12
GavinPearson said:
He'd try to enforce in the USA. Technically he could try to extradite you if something in his opinion went wrong, and could actually manage it if he convinced the right judges.
No, he couldn't.Breach of an NDA would be a civil matter. Extradition only applies to criminal matters.
That said, the US courts are pretty parochial when it comes to jurisdiction - if it affects a US citizen, they usually take the view that they should hear the claim. As such, if it became litigious, you'd most likely get sucked into proceedings over there. If you don't turn up to defend it, or appoint US lawyers, you'd end up with judgment against you simply by virtue of not having taken any step to defend the claim.
Lurking Lawyer said:
GavinPearson said:
He'd try to enforce in the USA. Technically he could try to extradite you if something in his opinion went wrong, and could actually manage it if he convinced the right judges.
No, he couldn't.Breach of an NDA would be a civil matter. Extradition only applies to criminal matters.
That said, the US courts are pretty parochial when it comes to jurisdiction - if it affects a US citizen, they usually take the view that they should hear the claim. As such, if it became litigious, you'd most likely get sucked into proceedings over there. If you don't turn up to defend it, or appoint US lawyers, you'd end up with judgment against you simply by virtue of not having taken any step to defend the claim.
Lurking Lawyer said:
GavinPearson said:
He'd try to enforce in the USA. Technically he could try to extradite you if something in his opinion went wrong, and could actually manage it if he convinced the right judges.
No, he couldn't.Breach of an NDA would be a civil matter. Extradition only applies to criminal matters.
That said, the US courts are pretty parochial when it comes to jurisdiction - if it affects a US citizen, they usually take the view that they should hear the claim. As such, if it became litigious, you'd most likely get sucked into proceedings over there. If you don't turn up to defend it, or appoint US lawyers, you'd end up with judgment against you simply by virtue of not having taken any step to defend the claim.
1) People could argue red was blue and win here.
2) If somebody argued there was wire fraud or theft it would be a crime.
3) If you visited the US and there was a judgement against you there is a risk that you will have further problems one way or another.
Bottom line - only sign something if you agree with all of the terms.
AND
Just because the NDA is a PhD project don't underestimate people's ability to throw the smelly brown stuff around.
NDAs are often used for the following:
i) Protection of products before they are on the open market
ii) If you are in the process of patenting an idea an NDA protects you prior to the patent coming through
Our company always refuses to sign up to anything but English law although compromises include:
- Choice of defending party
- NDA remains silent
Can usually get bigger companies to use English law as they often have UK offices, we have walked away from US business when companies won't switch, US law leaves you open to too much potential pain.
Ben
i) Protection of products before they are on the open market
ii) If you are in the process of patenting an idea an NDA protects you prior to the patent coming through
Our company always refuses to sign up to anything but English law although compromises include:
- Choice of defending party
- NDA remains silent
Can usually get bigger companies to use English law as they often have UK offices, we have walked away from US business when companies won't switch, US law leaves you open to too much potential pain.
Ben
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