1. What is an NNN Agreement?
A Non-disclosure, Non-use and Non-circumvention Agreement (NNN) is an agreement used to protect confidential information, and to prevent a company or person from using your information to compete against you or go around you to your own customers. These contracts are commonly used before revealing anything important to anyone — such as your technology, designs, or customer lists — whether those qualify for trade secret protection or not.
Because our international attorneys so often draft NNN Agreements, we have a template email we send to our clients (modified each time to suit the particular situation) explaining the customized NNN Agreement we have just drafted for them and what they should do with that agreement going forward. The below is such an email and I write about it because it not only explains how NNN Agreements should be employed, it also explains what makes NNN Agreements different from traditional NDA Agreements and why NNN Agreements are so important internaitionally.
Attached please find an English/Vietnamese draft NNN Agreement for use with XYZ Vietnamese company. My comments follow:
1. This is not a traditional US-style NDA agreement. A traditional NDA agreement relies on the concept of trade secrecy. Under this sort of an agreement, only something that qualifies now and later as a trade secret is entitled to protection. As a practical matter, the information you will be disclosing likely does not meet the technical legal standard for trade secrecy in Vietnam (or any other country for that matter). Therefore, we wrote this NNN Agreement to prevent your counterparty from using the information you give them in competition with you, whether it is a trade secret or not.
2. The NNN agreement has no set term. In other words, XYZ Company can NEVER use your confidential information; it is a permanent obligation.
3. The agreement holds XYZ Company liable for any damages caused by a related party in violation of the agreement, as if the act were committed by XYZ Company. We do this because if we didn’t, there is there would be a much greater likelihood that XYZ Company would get sloppy with your information and allow one of its employees or vendors to compromise your information.
4. The agreement provides for contract damages in a specific monetary amount for every act of breach. This provision provides two primary benefits. First, it makes clear to XYZ Company that it will face real and quantifiable consequences each time it breaches the NNN agreement. Second, a specific monetary amount provides for a specific minimum level of damages which then provides a court with the basis for a pre-judgment seizure of assets. A credible threat of your seizing XYZ Company assets greatly increases the likelihood of XYZ Company abiding by your NNN agreement. This amount needs to be a reasonable estimate of your damages as a result of XYZ Company’s violation of the NNN. The amount we have set for contract damages in your contract is fairly standard for this sort of transaction in Vietnam.
5. This agreement gives you the right to enter into an NNN with a subcontractor. Regardless of whether you enter into such a separate agreement, XYZ Company will be liable for damages caused by a subcontractor on the same basis as if the act were committed by XYZ Company.
6. We were able to confirm that XYZ Company’s name and address matches the relevant government website. According to available government data, ________’s title at the company is manager and executive director and I have inserted this information into the agreement. I urge you to read our full due diligence report on XYZ Company.
7. If XYZ Company accepts the terms of the agreement, you should go first by signing and dating this agreement, and then sending it to XYZ Company. You should wait until you get this agreement back, fully executed, before you disclose any confidential information.
Please review and get back to me with any questions.
For more specifics on what should go into your international NNN Agreement, check out China NNN Agreements, as most of the detailed information there holds true for just about all countries.
