I want to sign an NDA to work with a software company.  Not being a
lawyer myself I have a question about the legalese:

The Fifth article of the NDA states (I'm paraphrasing...see the real
NDA for exact wording) that both parties agree that a breach of
agreement means that there is no adequate remedy.  However it then
goes on to allow that the injured party is entitled to "any other
rights and remedies" as well as an injunction.  This is inconsistent -
if I admit to causing harm for which there is no adequate remedy, then
how can there be any remedies?  Basically what I am asking is what am
I signing away if I agree to this - by admitting that I might cause
unremedy-able harm by violating the NDA?  This seems like a pretty
wide open condition, to my untrained mind.


See the Ambrosia Software NDA at 
http://www.ambrosiasw.com/TechWorks/NDAAgree.html

Dear Fan,
As missy indicates, counsel is always a good idea for something like
this, though the agreement may not be negotiable - take it or leave
it.

Let me, please, answer this question with my personal opinion. 
Although I am an attorney, since I am only licensed in Michigan, this
opinion is not intended to be legal advice in any other state or
jurisdiction.

Let's look at the clause closely:

(1) "Each party acknowledges that the other party shall not have an
adequate remedy in the event it breaches this Agreement . . .

(2)  "and that the other party [Ambrosia] will suffer irreparable
damage and injury in such event . . .

(3)  "and it agrees that the other party [Ambrosia], 

(4)  "in addition to any other rights and remedies, 

(5)  "shall be entitled to an injunction restricting it [you]from
committing or continuing any violation of this Agreement."

Now, (1) "shall not have an adequate remedy" is seemingly inconsistent
with the remaining language (injunctive relief is a "remedy" but is an
equitable remedy as opposed to a legal remedy); what the drafter
probably meant is "shall not have an adequate remedy at law".  They
clearly want the power to enjoin you (or any other
contractor/employer) from using their stuff. We don't want the money,
we want to put them out of the business of using our stuff.

In (2) "irreparable damage" = can't be measured in dollars and cents =
we want an injunction.

In (3) you agree that Ambrosia

(4)  in addition to whatever else the court can fashion as a remedy
(this is a bit inconsistent with (1) + (2)

(5)  that they can enjoin you (by order of the court) from using their
intellectual property / trade secrets / or other proprietary
information.

'Money doesn't cut it . . . we want to put this guy out of business if
he tries to make a buck with our proprietary information.'

The risk of course is, if you leave, or once you leave, what
constitutes their 'stuff' as opposed to your own knowledge and skill.
How aggressive have they been in "enforcing" this kind of agreement.
Therein lies your risk. If they only seek to prevent truly egregious
breaches, that is one thing and can probably be lived with; if on the
other hand they are aggressive - you will spend $20K fighting them in
court.

An attorney should be able to assist you with this for less than $500
(say 3 hours work @ $150/hr).  The good part of seeking outside
counsel is that they can be your mouthpiece and you can always blame
the %^&* attorney, rather than appearing to be the "bad guy" to the
employer.

I hope that this is helpful. Entire law books are written on this
subject and there are a whole host of considerations. Please let me
know if I can clarify this answer any further.

Best of luck!

Tom

---

Clarification of Answer by weisstho-ga on 15 May 2002 12:24 PDT

drdavid's advice of having an expiration date, or some other temporal
statement, is an EXCELLENT piece of advice. How long am I obligated,
in what (which) industries am I restricted, and what knowledge must I
hold sacred?

All good questions. 

Thanks again!!

Tom

Very detailed response.  Filled in most of my uncertainty without
having to get charged for $150 for authentic legal advice (which is
more than I currently need)

I would really, really, *really* recommend you take this to your own
attorney for sound advice.  This isn't something you want to leave to
the non-professionals.

Just my carefully considered two cents, and what I would do in your
position.

missy-ga

The sixth clause in your NDA should give you a little more of a clue :

"SIXTH: If any provision of this Agreement shall, to any extent, be
found to be invalid or unenforceable, the remainder of such invalid or
unenforceable provision shall be reformed so as to be valid and
enforceable to the full extent permitted by law."

Rather than limiting themselves to a specific course of action, they
are leaving all options open, but legally notifying you that they plan
to do so. The bottom line is, you are be held accountable with pretty
much unlimited liability - in reality it would come down to how much
of a "remedy" they could truly convince the courts to enforce in the
case that the agreement is broken.

Now if google answers would speed up my application process (3 weeks
and counting) I could write a little more in the form of an answer...
but last time I wrote a decent comment, someone queued it for an
answer before I could finish typing the comment.

I'm not a lawyer, but I've read, negotiated and signed a lot of
non-disclosure agreements. This one looks pretty standard to me. The
only issue I would consider negotiating is the addition of an
expiration date. I believe, and many companies require, that all
non-disclosure agreements should have a built-in expiration date. This
can take two forms. The agreement itself may last for, say, 12 months
after which it must be renewed if there is still an ongoing
relationship. This forces the parties to consider whether or not to
return confidential documents while they can still be found. The other
form of expiration is to say that the information is confidential for
a maximum of three or five years. In most businesses, and especially
in software-related businesses, three to five years is a very long
time, and very little information retains any value that long.

But to address your specific concerns with paragraph 5, I think I can
paraphrase it as follows:

"We agree that if either of us talks to some third party about what
we're doing, it could cost us a lot of money, more than we could hope
to recover in a damage lawsuit. However, we reserve to right to sue
for as much as we can get and to get an injunction to stop any further
information leaks and any use of the leaked information."

I personally don't see this as opening you up to any unexpected
liabilities. It pretty much states what would be true by default
anyway. But remember, this is just my personal opinion--please don't
try to sue me if I'm wrong!

Hi dcunitedfan.

I read the responses and felt the need to add my perspective as
another "food for thought".

I interpret their statement "... the other party shall not have an
adequate remedy" to mean that "there is no remedy that is adequate". 
It seems that this first statement and the second statement "... the
other party shall suffer irreparable damage ..." are linked with a
single "and" making them appear to be a compound sentence composed of
two separate thoughts when, in the way I'm reading it, the "and" is
meant to link the two thoughts together.  In other words, they appear
to want you to acknowledge that (a) "no remedy is adequate" (my
interpretation) AND that (b) "the other party shall suffer irreparable
damage".  It makes perfect sense that if one is "irreparably damaged",
that there would be no remedy that would adequately compensate them.

Let me say that while I'm offering another insight as to a potential
meaning, one should NEVER assume what is "meant", as the courts will
review what is actually written if a controversy should ever arise. 
As a general rule, if a statement can be construed to have more than
one meaning, absolutely have it reworded for better clarification.  As
always, you should consult with an attorney in your state to ensure
that your rights are fully protected, as laws vary from state to
state.  Spending a few dollars on a lawyer now could end up saving you
a lot more in the long run in the event a controversy ever arises
involving this Agreement.

Bottom line is - if you are uncomfortable with its present form,
chances are they would agree to reword it to better clarify what they
probably meant in the first place.  If they want to commit to you and
have a good business relationship, they should be reasonable.  It
never hurts to ask.  If they are unreasonable and/or won't even
consider your concerns, then perhaps reconsideration of your
commitment to them might be in order ...

-Tracker-