NDA Disclosure Periods, Protection Periods and Phone Booths
As we wait for the federal government to open again, a number of government contractors are using this period to refine and optimize their procedures and frameworks to adopt best practices, including with regard to their contract forms, agreements, and clauses.
One type of contract clause that may bear examining is the non-disclosure or confidentiality provision. Confidentiality and non-disclosure clauses are found in a wide variety of contracts, including employment agreements, intellectual property agreements, teaming agreements and standalone non-disclosure agreements (NDA’s). In many, perhaps even most, circumstances these provisions should identify two distinct confidentiality time periods.
The Disclosure Period
So back in the day – before Android, iPhone and the glint of their OLED screens brought us out of the dark ages – if you were out and about and needed to make a phone call, you could look for the nearest phone booth to step into, close the door and chat away with some assurance that your conversation would not be overheard. Often, you might find two people in a phone booth having conversations either with themselves or with a person at the other end of the line.
A well-crafted NDA or confidentiality clause will typically set out a Disclosure Period that specifies the time period during which all communications between the parties are expected to remain confidential. So in our phone booth example, the Disclosure Period can be compared to the time that two people spend in the phone booth having conversations they intend to be private. Once they step outside the phone booth – i.e., once the Disclosure Period ends - they are free to continue talking to each other (and to other people), but now these subsequent conversations are no longer intended to be kept confidential.
The Protection Period
But what about the earlier private conversations that our two chatty friends had in the phone booth? Having stepped out, can they immediately start telling other people about those discussions? The answer to that question, from an NDA perspective, will depend on whether they agreed to a Protection Period that keeps them from disclosing those earlier conversations to other people. If, for example, they pinky swore that their phone-booth conversations would stay private for a week, their one-week Protection Period would prevent them from disclosing those conversations to other people for a week, notwithstanding that the discussions they had outside the phone booth - i.e., outside the Disclosure Period - can immediately be shared with other people. So a Protection Period identifies the time period in which communications made during a Disclosure Period will remain confidential and protected from further disclosure to third parties.
Specifying clearly in an NDA or confidentiality agreement a Protection Period that outlasts the Disclosure Period is crucial for protecting certain proprietary information like trade secrets and SBIR/STTR data. Indeed, an SBIR company that does not specify in an NDA with subcontractors or collaborators a Protection Period that - at a minimum - coincides with the relevant SBIR/STTR data protection period risks significantly undermining the value of the unique SBIR data protections contained in its SBIR/STTR contract or funding agreement.
But sometimes, particularly in simple forms or non-disclosure clauses, the two confidentiality periods are not distinguished at all, which can lead to unexpectedly premature disclosures of proprietary information. For example, confidentiality clauses often are embedded in forms or contracts that specify only one contract “term” for all performance requirements. In the absence of a specified Protection Period, any non-disclosure obligations become extinguished at the conclusion of the contract or agreement.
Government contractors that wish to protect proprietary information like business and sales data, intellectual property, and SBIR/STTR data, therefore, should examine their confidentiality agreements and clauses, including those found in employment documents, vendor forms and teaming agreements, to make sure they specify Protection Periods that adequately preserve the value of their confidential information.
