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NDA confidentiality obligations versus secret government disclosure orders

The scenario: You’re negotiating a nondisclosure agreement

You’re in discussions with a prospective business partner, which we’ll call The Other Side. You’re getting to the point where TOS will need to provide you with information that they regard as confidential.

TOS sends over a draft of a confidentiality agreement, a.k.a. an NDA. As usual, it prohibits you from disclosing their confidential information without their permission.

What if someday you’re served with a search warrant, etc.

You want the NDA to address a particular what-if possibility: Conceivably, you might someday get served with a court order, such a subpoena or a search warrant, directing you to turn over TOS’s confidential information. If that were ever to happen, you don’t want to have to choose between going to jail (for disobeying the court order) or breaching the NDA.

So you ask for an exception to the NDA’s disclosure restrictions: You want the NDA to say that it won’t be a breach if you disclose confidential information in response to a subpoena, search warrant, etc.

The Other Side will want to know that you’re turning over their information

TOS says fine, we can live with that exception — but we need to add some language to it: If you ever do need to disclose our information pursuant to a court order, then you’ll have to tell us right away, so that we can go to court to contest the order or at least try to make sure it protects our information.

But you might go to jail if you tell them

You might not want to agree to that language, because it might be illegal for you to tell anyone, let alone the disclosing party, that you were ordered to produce the information.

A true story: Jacob Appelbaum and WikiLeaks

In 2011, the U.S. Government reportedly obtained a secret court order, directing Google and Internet service provider Sonic.net to turn over information about emails that had been sent and received by WikiLeaks volunteer Jacob Appelbaum — and not to reveal to Appelbaum that they were doing so.

The order appears to have been issued under the Electronic Communications Privacy Act, 18 U.S.C. §§ 2510-2522, and specifically under § 2518(8)(b) and (c), which provide in part that “[a]pplications made and orders granted under this chapter shall be sealed by the judge. … Such applications and orders shall be disclosed only upon a showing of good cause before a judge of competent jurisdiction …. Any violation of the provisions of this subsection may be punished as contempt of the issuing or denying judge.”

(The Politico Web site has a non-paywall version of the story at http://goo.gl/KdlI8.)

Compromise language

Here’s some language that might satisfy both you and The Other Side:

The receiving party may disclose confidential information when required by law, for example in response to a subpoena or a search warrant or in a securities filing. The receiving party will:

(1) promptly advise the disclosing party upon learning of the disclosure requirement, subject to any applicable legal restrictions [emphasis added]; and

(2) provide reasonable cooperation with any efforts by the disclosing party, at the disclosing party’s request and expense, to limit the disclosure and/or to obtain legal protection for the information to be disclosed.

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