Texas Law On Confidentiality Agreements

Option #3: Incorporate protective measures into NDAS subject to Texas law. This route does not offer a 100% guarantee to the owner of the trade secret simply because the courts have not yet considered the applicability of the NDAS, which last forever. However, if an NDA is subject to Texas law, you should consider the following to maximize the likelihood that a court will allow the NDA to be applied sustainably. Identify in the NDA the events that lead to its end. For example, NDSs often state that the obligation of confidentiality is extinguished when the information is made public or when the recipient receives the information from a third party without an obligation of confidentiality. This would give a subsequent review tribunal the opportunity to return the Texas Supreme Court`s decision in City of Big Spring v. Of Control, 404 s.W.2d 810 (Tex. 1966) to eternal NDA trade secrets. Big Spring found that a contract between government agencies was for a fixed term and could not be terminated based on its existence, given that the term of the contract would expire as soon as the State of Texas ceased to operate a hospital on the same site. Note, however, that federal cases have characterized Big Spring as an exception that may be limited to contracts between government agencies.

In contrast, the Fort Worth Court of Appeal followed Big Spring and found that a telephone directory publishing contract could not be terminated continuously. Brittian v. General Telephone Co. of Southwest, 533 S.W.2d 886, 891-92 (Tex. App… Ft. Worth 1976, writ dism`d). “The most valuable asset I know is information.” [1] This is why confidentiality agreements (“CAs”, also commonly referred to as confidentiality agreements or “NDAs”) are commonly used in all facets of the energy industry, from an E&P company studying strategic transactions to a seismic company negotiating the manufacture of devices.

And for good reason: very valuable, confidential and/or proprietary information must often be entrusted to a third party, with the certainty that such trusted conferences will not be violated. Many wars have been waged in Texas courts over the applicability of non-compete rules. But relatively few people have been held on the applicability of confidentiality agreements. There are many reasons for this, including the fact that Texas courts have routinely held that, unlike non-competition rules, confidentiality agreements do not restrict trade; That is why they are much more enforceable. If you extend this concept to an NDA, imagine a license agreement that requires unlimited confidentiality, but only requires the licensee to pay royalties for a set period of time. If, after the royalties have been removed, the licensee`s only obligation is to maintain the confidentiality of the trade secrets, the licensor could cite Leader to support its position that the contract cannot be terminated in stock. Where possible, also include the NDA in a broader contract. If the majority of the obligations of the recipient of the information under this agreement expire within a certain period of time, a court could make a decision to enforce ongoing confidentiality obligations by referring to University Computing Co. v. Leader Corp., 371 F. Supp.

86, 88 (N.D. Tex 1974). Although Leader did not consider confidentiality obligations, the Tribunal rejected the argument that an open-ended licence agreement could be terminated after authorisation. In its analysis of the issue, the Tribunal stated that a contract of indefinite duration is not terminable after a time limitation if the party wishing to terminate the contract “fulfils a substantial part” of its obligations during a given period. Führer, 371 F. . . .

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