More legal entanglements

March 1, 2002
Watch out for nondisclosure agreements. You could end up in court!
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by Andy Wilson
[email protected]

Watch out for nondisclosure agreements. You could end up in court!

During the past few years, Vision Systems Design has covered some of the legal issues confronting engineers, engineering managers, and systems integrators in the machine-vision and image-processing industry. These issues have included the threat of potential lawsuits from the Lemuelson Foundation and the problems of signing noncompete agreements before being hired, among others. This month, another legal specter emerges—the product-related nondisclosure agreement.

Consider this scenario. You are a successful designer at a board-level or camera manufacturer. You are approached, say, by a semiconductor-company representative with news of a new product that will change your product line forever. This product is so hot that you must incorporate it into your next design or be left behind your competition.

After sparking your interest, the visiting company representative quickly whips out a nondisclosure agreement. Beginning with language such as "this is just a formality" and "this is just for our legal department," a lengthy document filled with very long sentences and complicated "legalese" confronts you.

After the brief preamble about how this agreement is supposed to benefit both companies, the pages quickly decay into a sea of gobbledygook in which, for example, they declare that each company can hold onto each other's confidential information for a period of up to three years or more. You may even find that such agreements contain statements that do not apply to you if you already were aware of the information being disclosed or becomes public knowledge through no fault of yours. Some of these agreements even include the fact that if you use the information in a manner to which it was not intended, you could end up in court!

Just the beginningNevertheless, you are really impressed by the semiconductor vendor's offering and really want to use its new part. You sign the nondisclosure agreement. Then, you find out that the product has already been announced to the press, several prominent company vice presidents have given lengthy public presentations, a number of chat rooms and the Internet are abuzz with the news, and several third-party vendors are offering support tools.

Theoretically, it could still be construed that you are breaking the agreement if you call any third parties, participate in the chat rooms, or try to discover what your competitors are doing with the new parts. For every contact you make regarding the part, you must, theoretically, call the semiconductor vendor to obtain permission. But whom should you call—the local sales representative, the vice president of marketing, or the company's legal department?

The entanglement escalates into a nightmare of feverish proportions. Once you have signed your name, it's in the hands of the lawyers—all because you wanted the latest semiconductor part to put in your system.

Now, imagine that you are in the market for a new car. Upon entering the showroom, the salesperson says, "Yes, you can buy a car today." You then start to ask questions about the size of the engine, the horsepower, torque, firing order, bore and compression ratio, rocker arms, and intake valve size. "Stop," says the salesperson, "you'll have to sign a product nondisclosure agreement before I can give you all that information, let you buy the car, or talk to other drivers about it."

Would you buy a new car (or even a used car) from that company? Of course not. And you should not have to buy semiconductors in the same way either.

Manufacturers should shun the use of nondisclosure agreements, and products should be released without restrictions. To spur product sales in the vision/imaging industry, all related product information should be presented uninhibited. In these troubled economic times, open information exchange is needed to promote industry growth.

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