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Ambushed by a late confidentiality claim
Not long ago, a startup company received a nastygram email from an established company. The email claimed that the startup had improperly made use of confidential information that the other company had provided to the startup. The startup had indeed used the other company’s information, but it was certain the other company had orally given permission. There was no nondisclosure agreement or other written confidentiality obligation — but the email trail did indicate that the other company thought that some of its information might be confidential.
The sixty-four dollar question was whether the startup had been under an oral obligation of confidence to the other company. That could have led to a he-said/she-said swearing match in court, with the startup company saying, “they gave us permission,” and the other company saying “no we didn’t.”
Happily for the startup, the totality of the email traffic made it clear that the answer was “no,” there was no obligation of confidence. After this was pointed out, the other company dropped the matter.
Sample language for an email confidentiality disclaimer
If it looks like business discussions might involve confidential information, it can be extremely useful to have a ‘paper trail’ that explicitly disclaims any obligation of confidence. Here’s an informal, one-sentence disclaimer that might well do the trick when included in an email, a letter, etc. (ask your lawyer whether it’s right for you, of course):
It’s understood that, unless we enter into a formal written confidentiality agreement, neither party will be under any confidentiality-based restrictions in what it can do with the other party’s information.
- The disclaimer doesn’t affect rights that aren’t based on the confidentiality of the information, such as rights arising under patent- or copyright law;
- It’s a two-way disclaimer, affecting each party.
Injecting this one sentence into the written discussion would encourage both sides, before they got too far down the road, to think about whether they needed an NDA. You could certainly embellish this language with additional legalese, but my guess is that for most situations it’d be fine as-is.
Hmm … I wonder if this should be fleshed out into a PRECUT letter of intent (LOI) form?
Ask the other side to agree to the disclaimer?
For most situations I don’t think I’d even try to get the other side to agree to the disclaimer sentence, for two reasons:
- The other side might say “no,” in which case a formal agreement might be needed to make the parties’ intentions clear;
- Except in special circumstances, both parties must expressly agree to a contract — therefore, if one party disclaims any intent to agree, that should be enough to prevent any contractual obligations from coming into being.
Include disclaimer in email signature block?
[EDIT:] A commenter at Hacker News asked whether it would make sense to include a confidentiality disclaimer in an email signature block. That might work sometimes, but my guess is that a lot of judges might be inclined to disregard it as mere boilerplate. Far better to include the disclaimer only on a case-by-case basis.
(If only companies could sign on to a “treaty” that included a provision along those lines, so that the provision would be binding as between any two treaty signatories without further formalities.)