Buyer Beware IP Issues in Corporate Purchasing

Generally, in any purchasing engagement, there will be an exchange of company and third-party supplier information, materials and data. Ideally, the purchasing company should take as many measures as possible to protect as much of its own information and, conversely, as little of a vendor's information as contractually possible. During the course of establishing contact with a vendor and making an actual purchase, the vendor will invariably be exposed to sensitive company information while, for example, making on-site sales calls, performing system or software maintenance, conducting demonstrations, and/or implementing the purchased goods. In some situations, a nondisclosure agreement between the company and supplier executed prior to any purchase may provide the necessary protections or, alternatively, the actual purchase agreement may incorporate confidentiality provisions.

By way of example, a clause such as the following may be used to protect company information:

As a result of Supplier's anticipated or actual performance under this Agreement, Supplier may receive or become exposed to (a) Company's intangible information expressed in the form of ideas, data, programs, technical, business or other types of intangible information, or (b) Company's documents, prints, tapes, discs, or other types of tangible information (such tangible and intangible information hereinafter called “Information”). Supplier agrees to (1) keep all such Information confidential and use such Information only for performing under this Agreement; (2) inform Supplier's employees, contractors and agents of their obligations to keep such Information confidential and require those employees, contractors and agents to honor such obligations by written agreement; and (3) promptly surrender or destroy such Information, and any copies thereof, free-of-charge, when requested to do so by Company.

Conversely, a corporate purchaser should strive to agree to as little protection for the vendor's or supplier's information that can be negotiated, so as the company will have little or no obligation to treat information from the vendor as confidential. The following clause is representative of such a position:

No specifications, drawings, sketches, models, samples, tools, computer or other apparatus programs, technical or business information or data, written, oral, or otherwise, furnished by Supplier to Company under this Agreement, or in contemplation of this Agreement shall be considered confidential or proprietary.

Of course, it may be necessary to carve out certain types of supplier information, such as in a software-related agreement where the vendor would be providing information to the company with some expectation of confidentiality in the software's use and dissemination. Additionally, suppliers typically and reasonably seek to carve out information related to their product/service pricing so that this information cannot be shared with competing suppliers and other third parties.