Non-Disclosure Agreements (NDAs) are standard contracts with the purpose of protecting the disclosure of confidential information to third parties. But often it may be difficult to realise how long an NDA lasts for, whether it lasts indefinitely, and your obligations when it expires.
Here is the typical length of NDAs and some helpful points.
The Term of the Agreement
The term of the NDA indicates how long the NDA is to apply for. Typically, the standard use for NDAs ranges from 1 to 5 years depending on the nature of the transaction or market condition. As an employer or business owner, you would want to enforce an NDA for as long as possible to maintain confidentiality. Employees/buyers are against being bound by an NDA for an indefinite period of time as it does not specify when their obligation is to end. For this reason, it is rare (yet possible) to see NDAs operating indefinitely as it unfairly prejudices the contracting party. Ideally, NDAs will cover an appropriate time to protect the disclosing party’s interest whilst not burdening the receiving party. This is especially important if a dispute arises, as Courts look to the period, reasonableness and impact on the receiving party in making their decision.
If a term of operation is not specified in the agreement, the parties may imply that the NDA will be in effect indefinitely. Such omittance of a term is not uncommon and frequently occurs when the agreement is based on an ongoing relationship. Although, most NDAs will expire after some point, usually upon agreement of the parties. Termination terms are beneficial for employer and employee as shared confidential information progressively loses its value over time. It may be prudent as an employee to assess how the length of duration may affect you as an employee and your future work.
Also, confidentiality automatically expires when confidential information becomes publicly available. Even if you manage to have an NDA with an indefinite time frame, once the information becomes public the confidentiality lapses.
It is important to note that information received after the final date of the NDA will not become confidential information. Even if an NDA has a survival clause that protects information received before the termination date, information received after will not be included. An example of this may be where you sign an NDA during the course of employment, but after leaving the job the NDA continues to apply for a certain amount of time (eg. 1-year post-employment). Any new confidential information you learn relevant to your prior position will not be covered by the NDA.
What Happens When the Contract Expires
Better NDAs will provide for what happens after the term of the contract expires. Usually, it will provide that, even if the term has ended, the disclosing party retains its obligations under intellectual property laws. The primary rights will always extend to the employer (or the one aiming to protect the confidential information). It is always necessary to find out how long your NDA lasts and see how it may affect you in the future.
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