I was thinking about how to properly create a valid trade secret confidentiality contract, and am wondering about some possible loopholes that are present.
The order of operations I started by imagining was this:
- Sign an NDA, without revealing any trade secrets.
- Tell them the trade secrets.
But this is not valid, because if you don't tell them in enough detail about your trade secret, then they can use it to develop competing projects without the NDA having any effect (See Space Data vs. X).
So to fix this, I thought of this process instead:
- Sign NDA, without revealing anything.
- Document the trade secrets, and have them sign the document that they have seen it.
This way, you have documentation that you have shown them the trade secrets, and you know the level of detail they were shown in.
But there is a loophole here. The person could read the trade secret document, and then not sign it. Then you are in the same position as the first scenario, but this time they have a better understanding of your trade secrets. So they could use them and the NDA wouldn't have any effect.
So that is loophole. What you want to do is somehow get them to sign the trade secret listing document before they have seen it. But they can't sign something that says they have seen it until after they have seen it. So catch 22.
So what I am now thinking is this:
- Sign the NDA, without revealing any trade secrets.
- Have them sign an "About to see the trade secrets document", which says they agree to look at the trade secrets document.
- Have them sign a third document, "I have seen the trade secrets document". This way we capture that they have actually seen the trade secrets.
But this might not even work, and can have the same problems as the second scenario. They could sign the "About to see the trade secrets document", then read the trade secrets, then decide not to sign the "I have seen the trade secrets document". So what you actually want is for the "About to see the trade secrets document" to be binding, that it somehow is legally valid, verifying that they will have in fact seen the documents immediately afterward.
I'm wondering how to get around this sort of Catch 22 situation, so that the NDA is legally binding/valid, and also you don't reveal the trade secrets too much before making sure the NDA is legally valid (that is, for it to be valid, you need to document the trade secrets and give them the document). Wondering how to do that without having them walk away having read the document but having not signed that they have read the document.
Perhaps you need an unbiased 3rd party present that will observe the entire process and sign off on it, sort of like a notary. I don't know.