Effective Agreements' Blog

The High Tech Enterprise: Some Sound Advice

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Any high tech enterprise that is not using the right contracts in its day-to-day operations may be more at risk than a company with a less technical orientation would be. High tech enterprises have all of the problems of a small- to medium-size company, plus the need to carefully protect their intellectual property (IP). They also have some unique agreements, such as development, joint development and some forms of OEM contracts.

For information on three kinds of contract from the high tech enterprise perspective, please to go to High Tech Enterprises: 5 Contract Tips.

What follows is advice for the high tech enterprise resulting from over ten years' experience performing due diligence on high tech firms. It does not deal with contracts other than to point out that your non disclosure agreement may not mean a thing if you fail to protect your confidential information carefully.

Protecting the High Tech Enterprise's Confidential Information

Did you know that labeling your information “confidential” may not be enough? What the lawyers have told me is that if you fail to make a real effort to protect such information, it may not be deemed confidential after all. When performing due diligence on high tech enterprises, I always had to take into account the protection in place for the confidential information:

• Is access to areas where confidential information is kept and used on a daily basis limited? If anyone off the street can walk into an area where sensitive information is in use, it could be hard to prove that you treated your material as if it was confidential. That is what key card picture badges are for.

• Can a visitor just walk into the operation, or is there a sign in procedure?

  • Ideally, visitors must identify themselves, sign in (a process which should include the name of the person with whom they are meeting), and receive a temporary badge that clearly identifies them as a visitor. That way, when the visitor asks to use the restroom and ends up in your test lab, someone will notice.

  • The person receiving the visitor should come to the reception area and escort the visitor everywhere.

  • Note the assumption that leaving the reception area requires a key card other than a visitor's.

• Do subcontractors have their own key cards that limit their access to certain areas?

• Is highly sensitive technical information left out on desk tops each night? That was a major red flag in due diligence.

This is just a part of what appears on my Due Diligence Check List. A very small company may not be able to comply with most of these requirements. It is important to have the ones you can in place now and add others as you grow.