M-Wakili

Ask a lawyer:
What are the most common mistakes to avoid when drafting a confidentiality clause in an IP agreement?

Introduction

Drafting a confidentiality clause in an Intellectual Property (IP) agreement is a critical task that requires meticulous attention to detail. Confidentiality clauses are designed to protect sensitive information from unauthorized disclosure, ensuring that proprietary information remains secure. However, there are several common mistakes that can undermine the effectiveness of these clauses. This article will explore these common pitfalls and provide guidance on how to avoid them, ensuring that your confidentiality clause is robust and enforceable under Kenyan law.

Table of Contents

  1. Defining Confidential Information

  2. Scope of the Confidentiality Clause

  3. Duration of the Confidentiality Obligation

  4. Exclusions from Confidentiality

  5. Remedies for Breach

  6. Jurisdiction and Governing Law

  7. Non-Circumvention Clauses

  8. Case Laws and Legal Precedents

  9. Conclusion

  10. TLDR

1. Defining Confidential Information

One of the most common mistakes in drafting confidentiality clauses is the failure to clearly define what constitutes "confidential information." Ambiguous definitions can lead to misunderstandings and disputes, making it difficult for both parties to understand their responsibilities.

How to Avoid:

  • Be Specific: Clearly outline what types of information are considered confidential. This can include technical data, business plans, financial information, and any other proprietary information.

  • Include Examples: Provide specific examples of what is considered confidential to avoid any ambiguity.

  • Update Regularly: Ensure that the definition of confidential information is updated regularly to include new types of information as they arise.

2. Scope of the Confidentiality Clause

Another common mistake is drafting a confidentiality clause that is either too broad or too narrow. A clause that is too broad may be unenforceable, while one that is too narrow may not provide adequate protection.

How to Avoid:

  • Tailor the Scope: Ensure that the scope of the confidentiality clause is tailored to the specific needs of the agreement. This includes specifying the parties involved, the type of information covered, and the context in which the information can be used.

  • Limit Access: Clearly state who within the organization is allowed to access the confidential information and under what circumstances.

3. Duration of the Confidentiality Obligation

Failing to specify the duration of the confidentiality obligation is another common mistake. Without a clear timeframe, it can be challenging to enforce the clause.

How to Avoid:

  • Specify a Timeframe: Clearly state the duration of the confidentiality obligation. This can be for a specific number of years or until a particular event occurs.

  • Consider Perpetual Obligations: For certain types of information, such as trade secrets, consider including a perpetual confidentiality obligation.

4. Exclusions from Confidentiality

Not including exclusions from confidentiality can lead to disputes and potential legal challenges. Certain types of information should be excluded from the confidentiality obligation, such as information that is already public or independently developed.

How to Avoid:

  • List Exclusions: Clearly list any exclusions from the confidentiality obligation. This can include information that is already public, independently developed, or disclosed with the consent of the disclosing party.

  • Include Legal Requirements: Ensure that the clause includes provisions for information that must be disclosed by law or court order.

5. Remedies for Breach

Failing to specify the remedies for breach of the confidentiality clause can leave the disclosing party without adequate recourse.

How to Avoid:

  • Specify Remedies: Clearly outline the remedies available in the event of a breach. This can include injunctive relief, damages, and specific performance.

  • Include Dispute Resolution: Consider including a dispute resolution mechanism, such as arbitration or mediation, to handle any disputes that arise from a breach of the confidentiality clause.

6. Jurisdiction and Governing Law

Not specifying the jurisdiction and governing law can lead to legal complications and make it difficult to enforce the confidentiality clause.

How to Avoid:

  • Specify Jurisdiction: Clearly state the jurisdiction and governing law that will apply to the confidentiality clause. This ensures that any disputes will be handled in a specific legal framework.

  • Consider International Implications: If the agreement involves parties from different countries, consider the international implications and specify the appropriate jurisdiction and governing law.

7. Non-Circumvention Clauses

A common mistake is not including a non-circumvention clause, which can prevent parties from bypassing the agreement and engaging directly.

How to Avoid:

  • Include Non-Circumvention Clauses: Ensure that the confidentiality clause includes a non-circumvention provision. This prevents parties from using the confidential information to engage directly with third parties, thereby bypassing the agreement.

8. Case Laws and Legal Precedents

Case Law 1: Kenya High Court Determines the Right to Access to Information

In a recent judgment, the High Court of Kenya determined the scope of the constitutional right to access information under Article 35 (1) and the ability of parties to rely on contractual non-disclosure clauses in refusing to grant access to information sought by third parties. This case highlights the importance of clearly defining the scope and limitations of confidentiality clauses to ensure they are enforceable.

Relevance: This case underscores the necessity of drafting clear and enforceable confidentiality clauses, particularly in the context of access to information.

Source: Bowmans Law

Case Law 2: Civil Case 75 of 2019

In this case, the court dealt with issues related to the enforcement of confidentiality clauses and the remedies available for breach. The court emphasized the importance of clearly specifying the remedies for breach in the confidentiality clause.

Relevance: This case highlights the importance of including specific remedies for breach in the confidentiality clause to ensure that the disclosing party has adequate recourse.

Source: Kenya Law

Conclusion

Drafting a confidentiality clause in an IP agreement requires careful consideration of various factors to ensure that the clause is robust and enforceable. By avoiding common mistakes such as failing to define confidential information, not specifying the scope and duration of the confidentiality obligation, and not including remedies for breach, you can create a clause that effectively protects your proprietary information.

TLDR

To avoid common mistakes when drafting a confidentiality clause in an IP agreement, ensure that you clearly define confidential information, specify the scope and duration of the confidentiality obligation, include exclusions and remedies for breach, and specify the jurisdiction and governing law. Additionally, consider including a non-circumvention clause to prevent parties from bypassing the agreement.

Sources

Answered by mwakili.com