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They may be out there–third-party patents you know nothing about when you are entering into agreements to protect against the disclosure or other unauthorized use of confidential information. Typically, attorneys rely on standard one- or two-page non-disclosure agreements (NDAs). But standard NDAs may be vulnerable to attack on the basis of these third-party patents.

The structure of the typical NDA consists of:

(1) a definition of “confidential information” that establishes the scope of protection for disclosure; (2) exclusions from the definition, such as information (a) rightfully in the possession of recipient prior to the disclosure, (b) legally obtained from third parties, so long as such information is not obtained, developed, or disclosed in violation of discloser’s rights; and (c) information in the public domain; (3) limitations and restrictions regarding the use of the confidential information; (4) an agreement that the recipient of the confidential information enter into an agreement with its employees and consultants to protect and secure the confidential information; (5) a statement of ownership [FOOTNOTE 1] of the confidential information; (6) remedies for a breach of the agreement; and (7) general provisions, such as integration, waiver, jurisdiction, and governing law.

Most NDAs contain these provisions and do not vary a great deal in structure or content. The typical NDA can be vitiated with evidence that the confidential information it addresses was in the public domain at the time of disclosure due to claims contained in a patent at the time the disclosure occurred. For example, in Kublan v. Hasbro Toy Division,[FOOTNOTE 2] a toy designer sued Hasbro for manufacturing a dinosaur puppet after the idea for the toy had been submitted to Hasbro under an NDA agreement. The U.S. District Court for the Southern District of New York dismissed the inventor’s claim, on Hasbro’s motion for summary judgment, because “plaintiff’s dinosaur puppet idea was in the public domain [in the form of three patents], which the confidentiality agreement . . . specifically excludes from coverage.”

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