Michigan NDA Template
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A Michigan NDA, or “nondisclosure agreement,” is like a legal promise between two or more parties. It lays down the law on what information you or any other party should keep under wraps. Startups and established businesses alike rely on NDAs. They're the legal safety net that guards against situations where employees or potential business partners might spill your company's confidential beans. They're essentially the knights in shining armor for your trade secrets and other valuable information - such as your business plans or client directories - preventing them from landing on public newsstands or in your competitor's strategizing room.
Trade Secret Definition in Michigan
“Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that is both of the following:
(i) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. (Michigan Uniform Trade Secrets Act §445.1902(d))
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Read on to learn more about Michigan NDAs, including:
What's included in a Michigan NDA?
Here are some key components that are typically included in a Michigan Nondisclosure Agreement:
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Disclosing and Receiving Party
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Definition of Confidential Information
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NDA Purpose
- Use of Confidential Information
- Limited Access to Confidential Information
- Exclusions - What's not Covered
- Term of Confidentiality Period
1. Disclosing and Receiving Party
In this region of your NDA, we introduce two major roles – the "disclosing party" and the "receiving party". The disclosing party is simply the one sharing the confidential information, while the receiving party is the recipient of this secret intelligence. This mainly applies to unilateral NDAs. For mutual NDAs, the roles aren't as distinct because both parties are both givers and takers of confidential info. Also, it's noteworthy to differentiate between an "Individual" and a "Company Name". If you're a solo player in this game, be it as the giver or taker, all you need is your name, making the "Company Name" space irrelevant.
This nondisclosure agreement (this “Agreement”) is dated [Date] (the “Effective Date”) and is between [Company Name of Disclosing Party; e.g. “Max Studios, LLC”; if you do not have a formal legal entity, use your legal name, e.g. “Max Smith”], (the “Company”), and [Company Name of Receiving Party; if receiving party does not have a formal legal entity, use their legal name] (the “Recipient”).
2. Definition of Confidential Information
In the context of your NDA, the precise outline of what technically counts as "confidential" can't be overemphasized. Why you ask? Well, envision a scenario where a boss tells an employee “All our dialogues for the next two years are confidential." Fast forward to a year later, the employee is about to cut ties, and the boss casually comments about expecting rain the next day. Later that night, the employee discusses the weather forecast with a mutual friend. Has there been a breach of confidentiality? Clearly not!
No legal institution would ever sanction such an overly generalized confidentiality clause. However, an extremely narrow definition isn't advised either, as it might open a loophole for unintended release of classified information which the receiving party can freely share.
Most enterprises swear by a boilerplate definition as seen in the template, but if something doesn't quite click, feel free to delve into our blog post about properly defining confidential information.
“Confidential Information” means any information that is proprietary or unique to the Company and that is disclosed by the Company to the Recipient during the term of this Agreement, including the following: trade secret information; matters of a technical nature such as processes, devices, techniques, data and formulas, research subjects and results; marketing methods; plans and strategies; information about operations, products, services, revenues, expenses, profits, sales, key personnel, customers, suppliers, and pricing policies; and any information concerning the marketing and other business affairs and methods of the Company which is not readily available to the public. “Confidential Information” also includes information of others that (1) is disclosed under this Agreement, (2) the Company is obligated to protect from disclosure or restricted from using or both, and (3) that would constitute “Confidential Information” if the information belonged to the Company.
3. NDA Purpose
One critical aspect of all NDAs, including the template, is stating the "purpose". Why are you setting up this agreement? This could range from "establishing a prototype for the disclosing party" to "evaluating the potential for a business collaboration amongst the entities involved." The objective is crucial as it determines to what ends the confidential information can be utilized.
For instance, if you're recruiting a web developer to construct your online presence, and you fill him in on your business strategy for a more bespoke website, you'd want to specify the purpose accordingly— highlighting the "design of specific sections of the website" or the likes.
A misplaced or too broad purpose could allow the developer to exploit your business's confidential information to replicate a similar enterprise and enjoy undue benefits. However, in most scenarios, the language encapsulated in the template suffices.
Here's a standard guideline for defining purpose.
“Purpose” means evaluating the parties’ capabilities in anticipation of pursuing one or more business opportunities.
4. Use of Confidential Information
The manner in how the confidential information is managed ties back to the purpose of your NDA. This part of the agreement sets the norms— the secret info is strictly for the agreed upon purpose. It might appear redundant, but consider a situation where someone misuses the confidential information, causing harm to the enterprise. This clause establishes guidelines to curb such incidents, thereby protecting both parties from undesired ramifications.
The Recipient shall use Confidential Information only for the Purpose. Unless otherwise agreed in writing, neither party shall disclose to a third party the fact that discussions or negotiations are taking place concerning the Purpose or any of the terms or other facts relating to the Purpose, including the status of negotiations between the parties.
5. Limited Access to Confidential Information
While you’re handing over your crucial data to the “Recipient”, there might be scenarios where the recipient could actually be a company or needs some legal advice. This is here the "Limited Access" caveat in the NDA comes into action.
The existing template language should be fine for most cases. However, always be mindful about who absolutely needs access to the sensitive information and limit the use accordingly. If the recipient does need to disclose the information to a third-party, they should ensure that this third-party also consents to identical NDA terms.
The Recipient shall protect the Confidential Information from unauthorized use and disclosure using the same degree of care that it uses with respect to its own information of like importance, but no less than a reasonable degree of care. The Recipient shall retain the Confidential Information in confidence and shall not disclose Confidential Information to any third party without the Company’s prior written consent. However, the Recipient may disclose the Confidential Information to employees, contractors, consultants, and authorized representatives of the Recipient who (1) require access to the information for the Purpose, (2) are informed by the Recipient of the Recipient’s obligations under this Agreement, and (3) are bound by contract or fiduciary duty to obligations of confidentiality and use restrictions with substantially similar function, purpose, scope, and effect to those of this Agreement and that are at least as protective of the Confidential Information as this Agreement.
6. Exclusions - What's not Covered
Next on the list are "exclusions", an essential part of your NDA that increase the odds of a court validating your agreement, should it come to that. The only item you might want to rethink is 4(a)(1), but that's only if you've previously shared confidential information with the recipient. Usually, the written exclusions in the template suffice for most circumstances.
(a) This Agreement imposes no obligations upon the Recipient with respect to Confidential Information that: (1) was known to the Recipient before disclosure by the Company as evidenced by contemporaneous records; (2) has become publicly available through no fault of the Recipient; (3) is disclosed to the Recipient by a third party that has the right to make the disclosure to the Recipient and that does not have any obligation of confidentiality with respect to the Confidential Information; or (4) is disclosed by the Recipient with the Company’s prior written consent.
(b) If the Recipient is required by any governmental agency, court, or other judicial or regulatory body to provide any Confidential Information received under this Agreement, then the Recipient will not be deemed to be in violation of this Agreement for the disclosure if the Recipient promptly gives written notice to the Company of the requirement to provide the Confidential Information and cooperates with the Company so that the Company may contest the requirement to provide the Confidential Information. The Recipient may disclose only that portion of the Confidential Information that it is legally required to furnish.
7. Term of Confidentiality Period
This stipulation sheds light on the length or term that the NDA would hold. The contract could span a singular deal that might wrap up in just a few days, or cover an infinite period. What you want to keep in mind while deciding the duration is the expected timeframe of the relationship. Typically, an NDA lasts beyond the specific contract or relationship, for as long as the information holds its secret status.
It might be beneficial to add a clause explicitly stating that the trade secret must remain shielded even after the termination of a business relationship or any other contractual commitment. If you're unsure about this part, note that the general timeframe is one to five years. But remember, the duration should be as long as necessary to maintain the confidentiality of the information.
This Agreement will continue for a period of one year from the Effective Date unless: (1) terminated earlier by either party upon written notice to the other; (2) extended by the mutual written agreement of the parties; or (3) superseded by a subsequent written agreement that explicitly sets forth the obligations of the parties with respect to Confidential Information. With respect to business information, the Recipient’s obligations of confidentiality and non-use under this Agreement will expire three years from the termination of this Agreement. With respect to all information that constitutes a trade secret, the Recipient’s obligations of confidentiality and non-use under this Agreement will survive the termination of this Agreement for as long as such information remains a trade secret under applicable law.
What happens if I've already disclosed confidential information?
If you have prematurely disclosed secrets, don't fret! We've got you covered. You'll need to make a few tweaks to the template, and we're here to guide you through it.
How do I protect my trade secret?
The core intent behind an NDA is to guard your confidential details. However, the information alone lacks value until it's part of a trade secret. For such info to carry weight, it must qualify as a trade secret. If you're scratching your head, wondering what qualifies as a trade secret or how to secure your trade secret aptly, don't worry. We've put together a handy guide to help you navigate these waters.