Category Archives: Contracts

10 Tips for Non-Disclosure Agreements in Asia

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Non-Disclosure Agreements (“NDAs”) often receive short shrift. Business persons plunge into sensitive discussions with third parties without bothering to obtain contractual protection or Legal issues the same NDA in every case, as if one-size-fits-all.

Whether one intends to disclose confidential information to prospective employees, partners, subcontractors, or others, it’s almost always prudent to first obtain a signed NDA. That’s especially true when doing business in Asia, where local laws and practices may pose unique challenges.

Here are 10 tips to help ensure your NDAs will do the job in Asia.

1. Non-Disclosure. The heart of an NDA is language prohibiting the unauthorized use or disclosure of certain information. The drafter of the agreement should first find out what types of information may be disclosed by each party, because the discloser will want stronger protection, while the recipient will want fewer restrictions. The agreement may require the recipient to use at least the same degree of care that it would use to protect its own confidential information, but at least a reasonable degree of care. Usually, the confidentiality obligations should be mutual. Continue reading →

Negotiation Training Course – KL, Malaysia, 10/24-25

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Seats are still available for this lively, results-oriented training session in Kuala Lumpur on October 24 & 25.

Hi. I’m Chris Neumeyer, Managing Partner of Asia Law and an international lawyer with more than 20 years of experience negotiating and drafting complex commercial and corporate agreements. I just returned from Bangkok, where I led this same lively two-day training course last week. Participants came from diverse functions and industries, but all came away with an increased awareness of key issues and tactics in contract negotiations, improved ability to achieve results and eagerness to put it into practice.

If you may wish to attend this training in KL on October 24-25 or have any questions, please write to marketing@VMACgroup.com or chrisneumeyer@asialaw.biz, but please hurry as spaces are filling up fast. Continue reading →

Protecting Trade Secrets

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As reported in the Wall Street Journal, notoriously secretive Apple Inc. was forced to divulge many diverse, and fascinating, trade secrets in its closely-watched litigation with Samsung (now in jury deliberation). Witnesses were compelled to testify concerning Apple’s development of the iPhone and iPad, its marketing budget and other sensitive matters, including – ironically – measures taken to protect the confidentiality of its trade secrets.

Unlike patents, a trade secret cannot gain protection through registration, but only through reasonable efforts to maintain its secrecy. For Apple, such efforts included “locking down” one floor in a building and installing cameras and keycard readers to ensure that Project Purple, their code name for development of the iPhone, would remain confidential. Team members were recruited only from within the company and were only told the nature of the project after they had joined the team.

While few of us deal with trade secrets of that magnitude, virtually every successful company has some commercially valuable information that derives its value from not being widely known. In a future blog post, we will address judicial, legislative and administrative issues relating to trade secrets, but this post concerns practical measures that should be considered to protect the confidentiality of trade secrets. Continue reading →

10 Tips for Drafting Bullet-Proof Settlement Agreements

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Few contracts bring as much satisfaction as a well-crafted settlement agreement, for its ability to fully and finally resolve a dispute and bring lasting peace. To ensure that your settlement agreements meet those objectives, here are ten tips to consider.

1. Who is being released? The party being released (Releasee) will generally seek a release of not just itself but its subsidiaries, affiliates, officers, agents and so forth. Provided the Releasor agrees to such language, it should be included in the release provision (e.g., “Releasor hereby releases, waives and forever discharges…”), not in the first paragraph of the agreement after the name of the Releasee, as that would complicate matters, making the subsidiaries and affiliates parties to the agreement.

2. What is being released? To ensure broad coverage, the Releasee will usually want to include detailed recitals of the facts, claims and allegations leading up to the settlement, then state something like this: (all claims and liabilities relating to such matters shall be known as the “Dispute”). It’s then a simple matter to release all claims concerning the Dispute. Of course, the Releasor should make sure that any unsettled disputes are expressly excluded. Continue reading →

Rolling Forecasts: Minimizing Risks of Uncertain Supply and Demand

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When two companies enter in to a relationship for the manufacture and supply of goods, both sides often have legitimate concerns about the volume of future orders and production.

The customer seeks assurance that all of its orders will be filled, so it won’t be left in the lurch in times of high demand. The supplier seeks assurance that purchasing volume will remain steady, or increase, so its initial investment will be recaptured, profit margin will be realized and it won’t be stuck with a warehouse full of costly, unwanted inventory.

Those legitimate concerns on both sides may largely be alleviated through the artful drafting of several possible contract provisions. The variations are endless, but here are a few basics. Continue reading →

Enforceability of Forum Selection Provisions by U.S. Courts

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My former employer, a Taiwan OEM, was sued in U.S. District Court for $5.4 million for alleged breach of a patent licensing agreement. The agreement states that “any U.S. District Court will have jurisdiction” over disputes arising from the agreement. We promptly moved to dismiss for lack of jurisdiction, the case was dismissed and we sued them in Taiwan instead (“Ha! Welcome to Taiwan. How’s your Mandarin?”).

In that case, the U.S. federal court lacked jurisdiction – despite the choice of forum provision – because none of the parties was a U.S. entity, so no diversity jurisdiction existed, and the claim was for breach of contract, which is a state, not a federal claim. That is, the criteria for federal jurisdiction were not met and parties cannot create federal jurisdiction even by mutual agreement where it does not otherwise exist.

While the dismissal of our case was exhilarating, it was hardly a rare event. Courts routinely disregard the express language of choice of forum provisions when they feel the chosen forum is improper. Continue reading →

Technology Manufacturing Contracts: Don’t start work without ‘em.

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Here in Asia, it’s surprising how often technology companies will team up with a business partner and commence manufacturing, with no contract in place, placing trust in a few emails, oral conversations and purchase orders. I know, because they will then come to me, after problems have arisen, with questions about their legal rights. Regardless of whether the manufacturer is an ODM, OEM or contract manufacturer, much risk and uncertainty can be eliminated if the parties will first negotiate and sign a basic manufacturing agreement.

Below are a few key terms that may be clarified in such agreements.

Product and Pricing. Naturally, the agreement should include precise descriptions of the product, packaging and pricing, including design, specifications, materials, components, logos, and so forth. Such items are best described in addendums to the agreement, so they may be easily modified as needed. The agreement may also describe the process for making any price adjustments.

Quality and Inspections. The agreement should specify all governmental, environmental, industry, compatibility and customer quality requirements to be complied with, as well as required testing and certifications. It may permit quality audits by the customer (the customer may outsource that task if needed) and should clearly describe inspection rights and remedies for non-conforming products. Continue reading →

Joint Development Agreements: Proceed with Caution!

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Companies that wish to produce new technologies have basically three options: (a) develop the technology, (b) purchase or license it, or (c) jointly develop it with others. That third option is popular, as it allows two companies to share their respective strengths, resources and expertise and benefit from a synergistic business relationship. It is also risky, because each party relies on the other and may be required to share sensitive trade-secrets, know-how and other intellectual property rights. However, handled properly, the risks can be minimized and a mutually beneficial relationship can flourish.

Typically, such collaborations utilize a succession of agreements, starting with an NDA, followed by a Joint Development Agreement, then perhaps Manufacturing, Purchasing and Licensing Agreements. This article will focus on the Joint Development Agreement.

First, the agreement should clearly identify the parties and their objectives. What is the goal of the collaboration? What technology is being developed? Do the parties plan to manufacture or sell products? Where? When? Which party will have such rights and will they be exclusive? What is the expected timeframe? What are the milestones? Greater certainty up front will reduce future disagreements. Continue reading →

10 Tips for Drafting Non-Disclosure Agreements

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Like Rodney Dangerfield, Non-Disclosure Agreements (“NDAs”) often get no respect. Business persons may plunge into negotiations, revealing confidential information with no agreement in place, or Legal may issue the same form agreement in every case, as if one-size-fits-all. Well, like any contract, the NDA can provide vital protection, but should be drafted with care. Here are 10 tips to consider.

1. Nature of the Obligation. Naturally, the heart of the NDA is language prohibiting one party from wrongfully using or disclosing certain information received from the other. The agreement should require the recipient to use at least the same degree of care that it would use to protect its own confidential information, but at least a reasonable degree of care.

2. Mutual v. Unilateral. Legal should inquire with Business to learn what types of information will be disclosed by each party. Obviously, the disclosing party wants stronger protection; the receiving party wants fewer restrictions. Nonetheless, in almost every case each party will disclose some sensitive information, so it almost always makes sense to include mutual confidentiality obligations. Continue reading →

International Arbitration v. Litigation: Is ADR really Better?

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How many times have we heard the old clichés about arbitration being faster, cheaper and preferable to litigation? Well, that may be true in some cases, but often a party may be better off with litigation. Making that determination depends on multiple factors. This article will address seven of them.

1. Speed Surveys note a growing perception that arbitration is no faster, no cheaper and less reliable than litigation. In theory, there are many methods to speed up arbitration, such as using just one arbitrator, rather than three; restricting discovery, witnesses and submissions; submitting the case on the pleadings; and so forth. However, parties may feel such limitations inhibit their ability to fairly present their case and receive a correct decision. Consequently, such methods may be less suitable for more costly or complex disputes.

2. Cost Resolving a US$10 million dispute in the International Court of Arbitration, using three arbitrators, will cost $397,367 in administrative costs and arbitrator fees; a US$5 million dispute with one arbitrator will cost $132,349; but those figures don’t include fees for attorneys and experts. As with speed, the parties may reduce cost by limiting evidence, procedures and number of arbitrators; but, again, any savings must be weighed against the possibility of compromised justice. Continue reading →