China NDAs and Client Counseling

2010-02-17

Sort of a reminder post at CLB about the importance of Non-Disclosure Agreements for China deals. I agree with Dan's comments.

I don't have anything further as far as enforceability or importance of NDAs. They are a good idea almost all the time, should be in Chinese (and English, if you want), are enforceable under Chinese law, and should be tailored for particular purpose.

There is another issue here that's worth pointing out. NDAs are important and enforceable under law, and yet they are quite difficult to enforce practically because it's tough to collect/find sufficient evidence to prove unauthorized disclosure.

So I find myself having the same conversation over and over:

Me: Yes, an NDA is a very important next step.

Client: Is it enforceable?

Me: Absolutely, although it will be difficult to prove disclosure.

Client: So why should I bother?

Me: If you have no NDA, then it will be next to impossible to go after anyone who discloses without authorization.

Client: But it will cost me more in legal fees for a very low possibility of ever enforcing it.

Me: The cost is quite minimal (e.g. one hour of work). Even if you never enforce it, you are putting the other party on notice that you are serious about protecting your trade secrets and IP.

Client: I could just tell them that and avoid the legal fees.

Me: A formal document carries more weight.

Client: How about you throw in an NDA for free?

Me: How about you bite me?

I think I need to enroll in sensitivity training.

Tags: China Law