Contract section I'm not sure about
Thread poster: LilBridge

LilBridge
Poland
Local time: 23:58
English to Polish
+ ...
Nov 9, 2016

Hello,
my friend asked me to review a paragraph he is not sure about. it reads as follows:

“The Discloser understands that the Recipient (and in the case of XY Company, Affiliates of XY Company) may currently or in the future be developing information internally, or receiving information from other parties that may be similar to the Discloser's information. Accordingly, nothing in this Agreement will be construed as a representation or inference that the Recipient or Affiliates of XY Company will not develop products, or have products developed for it, that, without breach of this Agreement, compete with the products or systems contemplated by the Discloser's Confidential Information.”

After reviewing it I understand that, in short, the Recipient IS ENTITLED to develop products based on the information UNLESS it breaches the Contract.

However, the Contractor to be claims that the meaning is the opposite:

"It says that you can’t use any of the confidential information disclosed as part of this project to develop a competing product.
So if you were approached by someone looking to build a competing project, you could not use any of the confidential information we had shared with you."

Please be so kind and help me with this, I do not want to lead my friend astray.
Regards,
Magda

[Zmieniono 2016-11-09 19:41 GMT]

[Zmieniono 2016-11-09 19:44 GMT]


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Donatella Semproni  Identity Verified
Local time: 23:58
Member (2002)
English to Italian
+ ...
My view on this Nov 11, 2016

Hello,

Although the sentence is a bit convoluted, in my opinion it means that if the Recipient develops products that *compete* with those contemplated in the Confidential Information, this would constitute a breach of the Agreement.

Although the Recipient may in the future develop products *similar* to those in the Discloser's information, if they *compete with the products and systems contemplated by the Discloser's Confidential Information*, this would be a Breach of the Agreement.

The Agreements of this type always try to protect the owner of Confidential Information against competition. They usually only allow for the use of information which is already in the public domain, so this would be in favour of the above interpretation.

I hope this helps!

Donatella


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Samuel Murray  Identity Verified
Netherlands
Local time: 23:58
Member (2006)
English to Afrikaans
+ ...
My view on this Nov 11, 2016

LilBridge wrote:
“The Discloser [presumably the contractor] understands that the Recipient [presumably you] ... may currently or in the future be developing information internally, or receiving information from other parties that may be similar to the Discloser's information. Accordingly, nothing in this Agreement will be construed as a representation or inference that the Recipient ... will not develop products, or have products developed for it, that, without breach of this Agreement, compete with the products or systems contemplated by the Discloser's Confidential Information.”


IANAL, but AFAIK, it means that you are allowed to develop competing products, and that during the development of those products you are allowed to use information that is similar to the information that the contractor disclosed to you, as long as that information was developed internally or provided to you by someone else (i.e. as long as you did not learn of this information through the information that was disclosed by the contractor).

After reviewing it I understand that, in short, the Recipient IS ENTITLED to develop products based on the information UNLESS it breaches the Contract.


No, it means [or rather implies] that you're not allowed to use the contractor's information for developing competing products.

However, the Contractor to be claims that the meaning is the opposite:
"It says that (a) you can’t use any of the confidential information disclosed as part of this project to develop a competing product. So (b) if you were approached by someone looking to build a competing project, you could not use any of the confidential information we had shared with you."


Well, it doesn't actually say that, but when read with what we assume the rest of the agreement says, then it implies roughly what the contractor thinks it means.

The clause attempts to protect you by saying that if you are already in possession of information similar to the contractor's disclosed information, or if you gain possession of similar information via a third party, and if you are not otherwise in breach of the agreement, then you are allowed to use that information to develop competing products.


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Sheila Wilson  Identity Verified
Spain
Local time: 22:58
Member (2007)
English
+ ...
I think I agree with you Nov 11, 2016

LilBridge wrote:
Accordingly, nothing in this Agreement will be construed as a representation or inference that the Recipient or Affiliates of XY Company will not develop products, or have products developed for it, that, without breach of this Agreement, compete with the products or systems contemplated by the Discloser's Confidential Information.”

After reviewing it I understand that, in short, the Recipient IS ENTITLED to develop products based on the information UNLESS it breaches the Contract.

However, the Contractor to be claims that the meaning is the opposite:

"It says that you can’t use any of the confidential information disclosed as part of this project to develop a competing product.
So if you were approached by someone looking to build a competing project, you could not use any of the confidential information we had shared with you."

I think I agree - but I'm not sure. TBH, it's such a mess of negatives (... nothing ... not ... without ...) that I'm totally confused.


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Roni_S  Identity Verified
Slovakia
Local time: 23:58
Slovak to English
A piece of the puzzle Nov 11, 2016

is missing - what information is confidential. But, if we assume that use of the disclosed information would be a breach of the agreement then the recipient is free to develop or have developed competing products WITHOUT the use of the disclosed information. So if a third party came up with a copycat version of the discloser's product and took it to the recipient for development, that would be permitted because none of the discloser's information was used to develop the product.

But if you read it too many times your eyes do start to cross.


Edited for typo

[Edited at 2016-11-11 16:18 GMT]


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B D Finch  Identity Verified
France
Local time: 23:58
Member (2006)
French to English
+ ...
Independent development would not be in breach Nov 11, 2016

I agree with Samuel and disagree with Donatella's reading of the clause.

So long as the Recipient and affiliates of XY Company do not use the confidential information in order to develop competing products, their independent development of competing products and acquisition to that end of information similar to the confidential information would not be a breach of the agreement. I assume they might be required to provide evidence that their own product was independently developed.


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Katalin Horváth McClure  Identity Verified
United States
Local time: 17:58
Member (2002)
English to Hungarian
+ ...
Yes, this is my understanding, too Nov 11, 2016

B D Finch wrote:

I agree with Samuel and disagree with Donatella's reading of the clause.

So long as the Recipient and affiliates of XY Company do not use the confidential information in order to develop competing products, their independent development of competing products and acquisition to that end of information similar to the confidential information would not be a breach of the agreement. I assume they might be required to provide evidence that their own product was independently developed.


Yes, this is my understanding, too.
The Discloser understands that the Recipient (and in the case of XY Company, Affiliates of XY Company) may currently or in the future be developing information internally, or receiving information from other parties that may be similar to the Discloser's information.


Layman's paraphrasing: We know there are other smart people out there who can come up with the same idea, and that is OK.

Accordingly, nothing in this Agreement will be construed as a representation or inference that the Recipient or Affiliates of XY Company will not develop products, or have products developed for it, that, without breach of this Agreement, compete with the products or systems contemplated by the Discloser's Confidential Information.


Layman's paraphrasing: Because of what we just said, nothing in this agreement can forbid you from developing - without being in breach of contract - some products that compete with ours (that were described in the confidential info) . (So, yes, you may be able to develop competing products and not be in breach of contract. There is a way.)

Summary: As long as your development process is not in breach of contract***, we understand that you may develop competing products.
***Using info that was not provided by us, but was developed by you internally or given to you by someone else, is not breach of contract. Using confidential info that you learned the first time from us is breach of contract.

To the OP: I have a feeling that there is at least one more sentence that clarifies this last statement.



[Edited at 2016-11-11 23:14 GMT]


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LilBridge
Poland
Local time: 23:58
English to Polish
+ ...
TOPIC STARTER
Thank you! Nov 13, 2016

Thank you, guys for all your responses - they came a bit too late, unfortunately, because I needed them on the day I asked the question but I'm glad that the majority is in agreement with me (more or less)

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Chris S  Identity Verified
United Kingdom
Member (2011)
Swedish to English
+ ...
My 2c Nov 14, 2016

Samuel is right

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Jack Doughty  Identity Verified
United Kingdom
Local time: 22:58
Member (2000)
Russian to English
+ ...
Lawyers Nov 15, 2016

Such clauses are written by lawyers, so they are written in convoluted language capable of being interpreted in different ways, in order to provide lucrative future employment for lawyers.

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LilBridge
Poland
Local time: 23:58
English to Polish
+ ...
TOPIC STARTER
Lawyers.... Nov 15, 2016

And that is one of seriously uncool facts, Jack... but what can one do but translate and hope for the best?

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