Hashish companies use non-disclosure agreements (NDAs) continually. This can be resulting from a mixture of things: 1) the relative hardship of buying and defending mental property over marijuana-related processes and merchandise, as we speak and traditionally; 2) a common modus operandi of “near the vest” dealings in an business that traditionally was pushed underground; and three) the truth that most cannabis companies are small companies which haven’t taken steps to formally register (registrable) mental property.
Recipient’s obligations underneath this Settlement with respect to the Confidential Data will survive for a interval of two years.”
That’s it. That’s the entire drawback, which, if drafted by an legal professional on behalf of a shopper making an attempt to guard a commerce secret could rise to the extent of malpractice. Why? As a result of commerce secrets and techniques derive their safety from proof that the proprietor has taken cheap efforts to safeguard the key info. As soon as they’re out, they’re out, whether or not that’s two, 5 or ten years down the road. You’ll be able to’t un-ring a bell.
That stated, the above clause might be tremendous for an NDA the place the events are discussing an funding alternative in a cannabis enterprise and the knowledge is restricted to e.g., monetary statements or proposed deal phrases. It’s by no means OK, although, within the context of 1 social gathering making an attempt to guard a commerce secret as that time period is respectively outlined underneath the Defend Commerce Secrets and techniques Act or the Uniform Commerce Secrets and techniques Act as adopted within the related jurisdiction. Courts have stated as a lot for fairly a while.
When a shopper is considering safety of its commerce secrets and techniques, the recommendation our cannabis enterprise and mental property legal professionals give is often two-fold. First, one of the best ways to guard the key is rarely to speak about it (ever). Which means withholding confidential details about strategies and processes previous to getting signatures on an funding or licensing or different settlement. It additionally means safeguarding this info even from the companies’ personal workers, to the extent doable. Second, for those who merely should share the knowledge with a 3rd social gathering, the confidentiality obligations can by no means expire and the everyday exemption requests (court docket order, recipient’s advisors, and many others.) should be narrowed and provisioned (underneath seal, advisors should signal a separate NDA and recipient is liable, and many others.)
I anticipate crossing out the “will survive for X years” clause a dozen extra occasions in 2019 on kinds that purchasers ship our legislation agency for tailoring and assessment. I anticipate seeing it one other dozen occasions on NDAs despatched to our purchasers by different cannabis companies—companies which can be commerce secret holders—at which level our purchasers can think about whether or not to politely increase this difficulty or just take the favorable time period.
We frequently write on this weblog that cannabis agreements usually are not like different agreements. With commerce secrets and techniques, although, they type of are – at the least with respect to the results of disclosure. So be careful for any survival language if you’re making an attempt to safeguard a essential system, methodology, approach, course of, and many others. It’s a easy precaution however it might make all of the distinction in your cannabis enterprise.
Re-published with the permission of Harris Bricken and The Canna Legislation Weblog