Reading an English NDA: Essential Clauses Compared with Japanese Agreements

Hello, I’m Noriaki Asato, Representative Attorney of LegalAgent.

An NDA is often the first agreement a business receives when considering collaboration or procurement with an overseas company. An English-language non-disclosure agreement may mark the beginning of discussions about joint development, disclosure to a prospective supplier, or a capital and business alliance. Even for companies familiar with Japanese NDAs, the structure and phrasing of an English agreement can be unfamiliar. Before signing, it is essential to understand restrictions on use and disclosure, as well as obligations that continue after the agreement ends.

English and Japanese NDAs generally share the same purpose and basic structure: they define confidential information, prohibit use outside the agreed purpose, establish exclusions, and address what happens after termination. Some English forms spell out matters such as the designation of oral disclosures and permitted retained copies in detail. However, neither the level of detail nor the legal effect is determined by the language alone. The wording and governing law need to be examined in each case.

Structure and specificity compared with Japanese agreements

The topics covered in our basic checklist for reviewing Japanese NDAs commonly include the definition of confidential information, exclusions, permitted use, third-party disclosure, return or destruction, survival periods, and damages. English NDAs address much the same issues under headings such as Confidential Information, Exclusions, Purpose, Term, Return or Destruction of Information, Remedies, and Governing Law. Experience reviewing Japanese NDAs therefore provides a useful foundation.

One difference that often attracts attention is the specificity of the provisions. In addition to the standard of care for handling confidential information, a form may contain separate provisions on confidentiality designations and return or destruction procedures. Careful reading may reveal answers to operational questions in the agreement itself.

Confidential Information clauses commonly use two approaches to designation. One requires information to be marked “Confidential” and oral disclosures to be confirmed in writing within a specified period. Information without the required marking or notice may fall outside the definition. The other covers information that can objectively be understood to be confidential from its nature, whether or not it is marked. The latter reduces the discloser’s administrative burden but may leave the recipient less certain about the scope. A recipient should check whether marking is required. Where unmarked information is also covered, it should establish who may receive information obtained in meetings and emails and where it may be stored. A discloser should confirm that staff can carry out the marking and follow-up notification procedures.

The UK Intellectual Property Office’s guide to NDAs likewise identifies the information protected, permitted purpose, disclosure to employees and advisers, and confidentiality period as matters to address in the agreement. This is UK public guidance; it does not establish the enforceability of agreements governed by other countries’ laws.

Exclusions, purpose, and duration define the obligations

Exclusions clauses identify information outside the confidentiality obligation. Typical examples include publicly available information, information that becomes public through no fault of the recipient, information already held before disclosure, information lawfully obtained from a third party, and independently developed information. The underlying approach is shared with the exceptions to confidentiality provisions. An English NDA may expressly place the burden of proving independent development on the recipient. For transactions involving joint development or technical evaluation, maintaining development records from the outset can support that proof later.

The Purpose clause defines how disclosed information may be used. Distinguish between permission limited to evaluating a transaction and permission that extends to carrying it out. Using technical materials received for evaluation in product development may exceed the original purpose.

Permitted recipients must be checked separately in clauses such as Permitted Recipients or Representatives. A use that falls within the purpose does not automatically authorize disclosure to affiliates or external advisers. Check any need-to-know limitation, obligations to bind those recipients to confidentiality, and your company’s responsibility for their breaches.

Where disclosure is required by a court order or law, review provisions such as Compelled Disclosure. Relevant requirements include advance notice to the extent legally permitted, disclosure of only the minimum necessary information, and cooperation in seeking a protective order. This is a separate exception from ordinary permission to disclose to third parties.

Under Term, distinguish the duration of the agreement from the survival period of the confidentiality obligations. The same number of years can produce different end dates depending on whether the period runs from disclosure or termination. Check whether valuable technical information is subject to a longer or indefinite protection period.

Return or Destruction provisions require information to be returned or destroyed upon termination or request. If backup data and email attachments are included, assess technical feasibility in advance. Where deletion is difficult, consider exceptions for automatic backups and legally required records, and whether a destruction certificate is required. Permitted retention should be accompanied by restrictions on ordinary business use and continuing confidentiality obligations. A No License clause states that disclosure does not itself grant a license to use patents, copyrights, or other rights. It helps avoid the assumption that disclosure amounts to permission to exploit the underlying intellectual property.

Residuals clauses and injunctive relief

A Residuals clause deserves particular attention. It allows specified use of knowledge or know-how retained in the memories of the recipient’s employees. Its scope and conditions vary between forms. A discloser needs to determine how far the clause limits confidentiality and restrictions on use. If technical concepts or design principles explained in a meeting remain in the other party’s memory, the clause may make it harder to challenge their incorporation into similar technology in that party’s products. A discloser may negotiate deletion or a limitation excluding technical or potentially patentable information. A recipient planning development in the same field should compare the information its developers will encounter with the precise scope of the exception. Negotiation points include whether deliberate memorization or reuse with reference to materials is permitted and whether trade secrets or personal information are excluded. The clause should also be read together with No License to determine whether any intellectual property license is granted.

An Injunctive Relief clause expressly addresses the right to seek an injunction or interim relief on the basis that monetary damages alone may be inadequate. Because a disclosure cannot easily be undone, this can matter substantially to the discloser. The recipient should examine whether the subject matter and scope of the relief are excessively broad. However, including the clause does not automatically entitle a party to an injunction. Actual relief depends on applicable law and the court’s or other competent body’s assessment of the requirements. Wording about security and proof of loss should also be read carefully rather than treated as routine boilerplate.

The combination of Governing Law and Dispute Resolution also requires attention. The applicable country’s law, the choice between litigation and arbitration, and the forum can materially affect the cost of a dispute. If the agreement specifies the counterparty’s home law or local courts, consider whether your company has access to the necessary local support.

Translation pitfalls and pre-signing checks

When translating an English NDA for internal use, “shall” is a frequent source of misunderstanding. Although commonly used to impose an obligation, a Japanese rendering may sound softer and be mistaken for a best-efforts commitment. Also examine the difference between “may,” indicating permission or discretion, and “shall”; the standards associated with “reasonable efforts” and “best efforts”; and whether examples following “including” are exhaustive or illustrative. The standard of an efforts obligation depends on the governing law and the full context. Japanese translations alone should not be used to assume a fixed hierarchy between those expressions. Provisions that determine legal effect should be checked directly against the English original.

Before signing, first identify the definition of Confidential Information and any marking requirement, confirm the intended uses and permitted recipients, and distinguish the agreement term from the confidentiality period. Then check for a Residuals clause, the governing law, and the dispute forum. Confirm that the signing entity is the actual discloser or recipient and that the signatory has authority.

If a Japanese translation is attached, establish whether only the English version is authoritative or both versions are authoritative with a specified prevailing language in case of inconsistency. Adding a limitation absent from the original to an internal translation does not change the agreement with the counterparty. Conditions that require amendment must be reflected in the English text, and the version agreed by both parties should be retained.