When drafting or negotiating a Non-Disclosure Agreement (NDA), one question inevitably comes up: How long should this NDA last?

It seems like a simple issue – but it’s not. A common misconception is that the NDA’s “term” is a one-size-fits-all provision. In reality, there are two separate timelines at play, and failing to distinguish between them can lead to unintended exposure.

Let’s break it down:

Two Separate Clocks Are Running – And They Don’t Always Match

Most NDAs actually govern two distinct periods:

🔹 The Term for Receiving Confidential Information – This defines how long the parties are actively sharing information under the NDA. (Example: “This NDA will remain in effect for two years from the Effective Date.”)

🔹 The Term for Maintaining Confidentiality – This dictates how long the recipient must keep the information confidential, regardless of when it was disclosed. (Example: “Confidential information disclosed during the NDA’s term must remain confidential for five years after disclosure.”)

Why This Matters:

If the term only relates to a time period for receiving confidential information, then you need to keep track of the clock – because once that date passes, your subsequent discussions and disclosures are not protected under the NDA.

If the term relates to the period during which information will be protected as confidential information, then you need to consider the type of information being disclosed and the appropriate time during which this information should remain protected.

If the term of the NDA is stated without specifying whether it applies to receiving information or the term of protection, then you may be in an ambiguous situation – not a good place to be if you are dealing with valuable confidential information.

See our next post on how to determine the proper period for protection of various types of confidential information.

#NDATips #TradeSecrets #LegalStrategy #BusinessLaw #Confidentiality