Recent Case Highlights NDA Complications with Government Contracts

When collaborating with other individuals or companies during a creative process, an experienced intellectual property owner will know about the importance of non-disclosure agreements (NDAs).  NDAs offer crucial protection for sharing any type of sensitive information, but Users should be aware that – even with the use of an NDA – there may still be gaps in your protection.  This blog has highlighted important considerations when drafting NDAs in the past (definitions, exceptions, other agreements, etc.).  A recent case, however, Liberty Ammunition v. United States, highlights the extra care that should be taken when contracting with the U.S. Government.

In this patent case, in connection with it’s acquisition of Liberty Ammunition’s technology, the Government breached a number of NDAs executed by U.S. officials and support contractors.  It argued that the NDAs in question could not be enforced because their signers did not have a contracting officer’s warrant and therefore lacked authority to bind the Government.  Unfortunately for Liberty, the Federal Claims Court agreed with this argument.  This case highlights the potential lack of effectiveness of NDAs signed by U.S. Government personnel and should be a red flag for those who do business with Government personnel yet want to protect their intellectual property.  Consider these two important factors when preparing an NDA for such cases to make sure you are as well-protected as possible:

  1. Verify that the individual signing the NDA has authority to bind the Government to a contract.  If he or she does not have such authority, ask that the NDA be co-signed or endorsed by a warranted officer.
  2. Protect yourself.  Remember that an NDA is only a tool with which you can pursue compensation in a case of wrongful disclosure, but a piece of paper does not guarantee protection.  Things go wrong.  People break contracts.  You still need to guard your information from leaking, even with an NDA.

It is always best to consult an attorney when preparing a non-disclosure agreement. The experienced intellectual-property attorneys at Cislo & Thomas LLP are happy to come alongside you in this process.