International NDA Negotiation: Conducting Business Across Borders

Non-Disclosure Agreements (NDAs) facilitate secure business relationships globally. Without these essential agreements, trade secrets and proprietary information could be stolen or made public. Organizations depend upon NDAs to protect their innovation, research, and talent retention. Without the legally binding protection afforded by NDAs, disagreements between parties could threaten the security of sensitive information.

However, it can be difficult to conduct business across borders securely, as different countries abide by different sets of laws. When there is a conflict, which country’s rules take precedence? Whose court system will have jurisdiction in the event of a contractual dispute? And what injunctive relief is considered “fair” by both parties? 

Tech-forward corporate legal departments are leveraging innovations in artificial intelligence (AI) to review and negotiate international NDA agreements and identify questionable clauses for attorney review. Advanced AI platforms complete contract mark-up and offer revision suggestions based on a repository of past successful negotiations. These recent innovations in legal tech are enabling legal departments to complete hours worth of contract review work in minutes.

Common Pitfalls of International Non-Disclosure Agreements

Many challenges that attorneys encounter when executing NDAs across borders arise from common missteps that include:

• Assuming the definition of “trade secrets.” Compared to the U.S., China has a fairly broad definition of “trade secrets.” Any information with commercial value unknown to the public can become a confidentiality breach. In addition to enhancing IT security measures, articulating a clear, unambiguous definition of “trade secrets” covered by statutory protection can improve results.
  
  
• Only protecting top-secret information. NDAs are commonly used to protect confidential information. The NDA will protect against the release of information used in the design, manufacture, sale, and distribution of the product. However, once a patent is published, it is no longer confidential. Depending on your situation, you may consider including a “non-compete clause” to prevent former workers from directly competing against you, or have the counterparty agree not to manufacture or distribute the product without your express authorization. 
  
  
• Not specifying a venue where disputes will be heard. If your company is based in England, but your employees and customers are in the U.S., your company may prefer that disputes be resolved in England. But if the venue is not specified in the NDA it is possible that the determinative factor for where a dispute is heard is the counterparty's convenience. 
  
  
• Failing to consider expense. Litigation and arbitration can be costly. You’ll naturally want the other party to pay your attorney fees, but a court “penalty” requiring “proof of damages” is difficult to win, let alone enforce. Instead, it’s wiser to clearly describe a “pre-estimate of loss” and state directly in the NDA what actual losses are likely to be suffered by the non-breaching party. 

Cross-border NDAs are complex, detailed documents—especially when the agreement protects the use and migration of sensitive information across borders. Deciding upon governing law, jurisdiction, potential damages, and clear definitions of a breach can reduce uncertainty and decrease the time and money spent settling a dispute. In the past, legal teams spent hours negotiating an NDA. Recent innovations in legal tech have enabled legal departments to increase both the likelihood of getting the contract right the first time as well as the speed with which the NDAs are negotiated.

International NDA Negotiation: AI Changes Everything

LexCheck’s next-generation AI-powered contract review and negotiation platform enables corporate legal and procurement teams that handle a high volume of international NDAs to streamline contract review and negotiation processes. 

When applied to international NDAs, LexCheck can:

• Provide attorney-quality contract redlining and markup.
  
  
• Consult a digital playbook of your contracting preferred positions to “learn” your language
  
  
• Add or delete clauses based on your AI Digital Playbook and past successful NDAs.
  
  
• Recommend revisions to reduce risk.

By leveraging the speed and accuracy of an AI-powered contract negotiation platform, legal teams can focus on higher-value tasks while the AI flags any potentially problematic areas of a contract and recommends strategic revisions.