I just posted a one-page (front-and-back) PDF addendum with “down the middle” confidentiality provisions, excerpted from the Curator’s Notes e-book. The addendum can be attached to and incorporated by reference in another contract form.
“If the other side doesn’t know what to ask for, it’s not my job to educate them.” That’s one reason a contract drafter might not want to use a PRECUT baseline contract form: the other side would be led to the Curator’s Notes for that form, which would give them a good idea of what to ask for in negotiations.
Sure, it’s hard to give up the advantage of superior knowledge. But:
- Your notion that you’re the one with superior knowledge might be wishful thinking: The other side could bring in an expert who knows exactly what changes to demand. You might be better off setting the tone with a demonstrably-reasonable contract, and then standing on principle to reject unreasonable change requests.
- Suppose that the other side’s expertise is indeed lacking. If they’re “good corporate citizens,” chances are you’ll get them to signature faster — and you’ll be laying a foundation for a trusting relationship — if the draft you’re proposing seems fair and balanced.
- One danger of a clueless contract reviewer is this: The reviewer might make unreasonable demands, but being clueless, s/he won’t know — and can’t be convinced — of their unreasonableness. That could drive the negotiation right into the ditch.
Some say it’s best to start a contract negotiation by sending the other side your “hardball” or “killer” contract form that’s extremely biased toward your side. By doing so (the theory goes), you set the other side’s expectations, and increase the odds that you’ll eventually get more of what you want. Doing so also gives you a batch of potential concessions that you can use for horse-trading.
Certainly there are transactions in which it makes at least some sense to do this. And of course it’s always fun to play “the art of the deal”; it feels just plain good to come out on top when negotiating the legal fine points.
But don’t underestimate the price you’ll pay for these putative benefits:
- in business-staff time, because it’s not just lawyers who have to spend time negotiating legal T&Cs;
- in legal expense (which includes in-house counsel, too);
- in opportunity cost, not just for vendors as the ‘shot clock’ runs down at the end of the fiscal quarter, but also for buyers who likely have other things they could be doing as well (especially in this day and age of increased workloads on those who still have jobs).
So when negotiating a deal, you might want to ask yourself whether “hardball” negotiation of legal T&Cs is really what you want to be spending your time doing.
It might make sense instead to lead off with a balanced contract form that represents a fair, reasonable way of doing business.
That way, perhaps the parties could “just sign it” and get on with their business.
(Adapted from the preface of the Curator’s Notes to the PRECUT Nondisclosure Agreement.)
[UPDATED 2010-09-02]
PRECUT ™ NDA Downloads
- NDA form (fillable PDF)
- Curator’s Notes (PDF)
- Word document containing all PRECUT NDA clauses, plus numerous other NDA provisions that can be copied to a custom addendum (RTF)
- Confidentiality provisions adddendum — just the confidentiality provisions from the PRECUT NDA, for possible use with other agreements
Commentary
The PRECUT ™ Nondisclosure Agreement is a free, balanced, multi-purpose, customizable NDA, in the form of a fill-in PDF.
While of course no contract form can be one-size-fits-all, for many purposes the PRECUT NDA should be pretty much ready to sign as-is.
The Curator’s Notes contain many additional clauses and extensive commentary.
Ask your lawyer whether you could save time and money by using the PRECUT NDA as the foundation for your next nondisclosure agreement.
This is the first of what I hope will be a series of ready-to-sign contract forms available under a Creative Commons license.
Comments and other feedback are welcome, especially suggestions for other types of contract that you’d like to see developed.
I’ve posted a PDF of a six-slide deck I did for a recent client presentation. It explains the approach I use to do inventor interviews for patent applications. In a nutshell, the inventor and I camp out in a conference room with my laptop (or we work remotely over a screen-sharing connection). We collaboratively draft actual claims and explanatory footnotes.
This approach has proved quite popular: Inventors like being able to provide real-time feedback. That way, they don’t later have to correct a lawyer “term paper” that’s likely full of gaps and misunderstandings.
In a pinch, we could complete and file the patent application in one day if necessary. Employers like that.
I also posted a longer deck. It goes into considerably more detail about the approach.
And here’s a paper I wrote some years ago on the same subject. It was published in the Journal of the Patent and Trademark Office Society.
Hacker News links to a funny story about a Microsoft conference speaker who found out, too late, just who the audience member was that he was debating. See also the HN comments.
The story reminded me of an analogous experience I had some years ago. A client asked me to help negotiate a software license agreement drafted by the other side’s lawyer. I saw that the other lawyer had selectively copied clauses from a set of model software license provisions developed by an ABA committee. On the negotiation conference call, I mentioned that the other lawyer had left out certain language that had been included in the model provisions so that they would be a reasonable compromise. My client was amused at the other lawyer’s discomfort when he connected the dots and realized I had been the chairman of the model-provisions drafting committee.
I’m intrigued by the so-called “litigation prenup,” a.k.a. the Economical Litigation Agreement, or “ELA,” that’s being proposed by Boston litigator and former judge Daniel Winslow, along with the International Institute for Conflict Prevention & Resolution (CPR Institute).
Sure, there are the inevitable nay-sayers who claim that judges won’t like it (I think they’re wrong about that). And some of the specific ELA terms and conditions might need some fine-tuning.
But on the whole, Mr. Winslow is to be applauded for proposing what I think could be a huge money-saver.
Even so, however, I don’t think I’d counsel a client to make an irrevocable commitment to the ELA just yet. It’s too new a concept. The legal community needs to get some experience with it.
So I would change the proposed contract clause to include a narrow window of opportunity for either party to opt out, thusly:
XX. Economical Litigation Agreement: (a) Except as otherwise provided below, any dispute arising out of or relating to this Agreement or any transaction or relationship arising from it, including for example the breach, termination or validity of this Agreement, whether based on action in contract or tort, shall be finally resolved by civil litigation in accordance with the International Institute for Conflict Prevention & Resolution Economical Litigation Agreement (2010 edition) (the “ELA”), by a judge sitting without a jury.
(b) In jurisdictions where advance waiver of jury is prohibited as a matter of law, or where all parties to this Agreement subsequently agree in writing, such dispute shall be decided by a jury.
(c) Either party may opt out of the ELA by giving written notice to the other within ten business days after service of the summons and complaint or their equivalent.
(Italics indicate my edits; extra paragraphing added for easier reading.)
Reader Matt Richards of Constant Wave, a vendor of signal-analysis software, reports on an area where standardized contracts could do some good:
I was at a spectrum sharing conference this week, and it seems like a target-rich environment for lawyers in general. However, someone commented that a lot of progress could be made by businesses making agreements between themselves with appropriate contracts, and thereby not waiting for the government to develop more regulations. That made me immediately think of you.
The problem is that most spectrum is unused, and yet there is a huge demand for spectrum. Typically, the licensees are afraid to sublicense their spectrum when they aren’t using it because they think it may be illegal and they are concerned about what recourse they would have if the other party interfered with their use. It was noted that contracts already address these sorts of issues every day in other areas.
One example is a school district that broadcasts during school days. The spectrum is unused otherwise, the district could raise funds by leasing it (new ongoing revenue stream), and a business that would otherwise be shut out would be able to provide a service to customers. Seems like a win-win-win, but things are largely frozen, and a lack of trust was often cited as the culprit.
One presenter was the Peter Stanforth, the CTO and Founder of Spectrum Bridge, who is trying to create a secondary market for unused spectrum.
Feel free to pass this along to anyone who might be interested.
And, as always, thanks very much for your blog.
My former law partner David Healey has posted an excellent list of clauses that a licensee should press for in negotiating a patent license agreement, especially when taking the license to settle an infringement lawsuit. (Dave knows whereof he speaks; he has pulled off some stunning negotiations for licensees.)
A so-called intellectual property licensing company, supposedly based in Texas, has filed a patent-infringement suit against a long list of big-name defendants, accusing them of infringing the company’s patent on a spam-filtering technique. Mike Masnick at TechDirt has more details, mocking the company in an acerbic fisking of the press release issued by its law firm.
Here are the claims of U.S. Patent No. 6,018,761; bracketed lettering and bold-face emphasis are mine:
What is claimed is:
1. A method of obtaining context information about a sender of an electronic message using a mail processing comprising the steps of:
[a] scanning the message, usinig the mail processine program to determine if the message contains a reference in a header portion of the message to at least one feature of the sender’s context, wherein the sender’s context is information about the sender or the message that is usefiul to the recipient in understanding more about the context in which the sender sent the message;
[b] if the message contains such reference, using the mail processing program and such reference to obtain [sender] the context information from a location external to the message;
[c] if the message does not contain such reference, using the mail processing program and information present in the message to indirectly obtain the [sender] context information using external reference sources to find a reference to the [sender] context information.
2. The method of claim 1, wherein the reference to at least one feature is a reference to a location where context information is stored.
3. The method of claim 1, wherein the reference to at least one feature is a hint usable to retrieve a location where context information is stored.
Take a look at the language I’ve rendered in bold. It strikes me, and probably strikes you, as precisely what the Supreme Court meant last month in saying that an “abstract idea” could not be patented. I look forward to seeing this patent eventually ruled invalid under the Court’s Bilski decision.
Attention law firms and others who publish on-line PDF documents: Stop formatting your PDFs as though people were going to print them out on 8.5X11 letter-sized paper. Here’s what you should be doing [EDIT: See the alternative suggestion below, which I like even better]:
- Paper size should be 5 X 7; you might have to create a custom size for this, but that’s easy enough to do.
- Use landscape mode, with the long edge horizontal (like a business-letter envelope), not the traditional portrait mode.
- Use big 20-point type for body copy, and 22-, 24- and 26-point type for headings, not the usual 11- or 12-point type for printing on paper.
- Margins can stay at the traditional 1 inch all the way around.
Most readers will find this format vastly easier to read on-screen than the traditional letter-sized-paper format that law firms all seem to use.
[EDIT: Another good choice is to stick with the traditional 8.5x11 portrait format, but use the big 20-point type; that way, readers can use the Adobe Reader two-up page display to see two nicely-sized pages on the screen at once.]
If a reader absolutely must print out the PDF, the free Acrobat Reader software has a Page Scaling feature (on the Print dialog box) that allows printing multiple pages on a single sheet of paper; it’s the same concept as printing out deposition transcripts in miniscript format. You can print four totally-legible pages to a sheet when formatted as described above.
(I know all this because for the past couple of weeks I’ve been working on a book about nondisclosure agreements, which I plan to publish on-line in an e-book PDF format.)
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