The “Purpose”. One of the key clauses is the formulation of the defined term “Purpose”. The Purpose of a non-disclosure agreement determines what a receiving party may and may not do with the disclosed confidential information. The Purpose should be formulated accurately and in a sufficiently narrow manner. A narrow definition prevents that the receiving party uses the confidential information for competitive aims, for conducting a fishing expedition into product specifications with the aim of developing the same technology itself or with another party, or any other undesired purposes. An appropriate Purpose could be, for example:
- “discussing the feasibility of jointly developing product X to be used in market A and exchanging information about certain proprietary, secret technologies, including the possible terms and conditions of a joint development project”;
- “assessing the attractiveness of entering into a contractual alliance related to entering into the market of country B, including discussion on the possible terms and conditions of a contractual alliance”; or
- “Investigating the appropriateness of entering into a long-term supply agreement in relation to products Y and Z to be sold in the region of South East Asia, including discussion on the possible terms and conditions of a long-term supply”.
Not for pre-patent purposes. The Model Contract is not intended for use where patentable inventions are involved because more care is desired in order to prevent claims of co-inventorship or ‘prior use’. Nonetheless, if certain materials (or software source code) are disclosed for testing purposes, it is desirable to expressly provide that the materials or source code may not be analysed or re-engineered (unless analysis or re-engineering is the Purpose of the non-disclosure agreement).