The issues raised in the recently settled case, Venture Global Calcasieu, LLC v. Kiewit Louisiana Co., stress the importance of having a robust non-disclosure agreement (NDA), which is sometimes referred to as a “confidentiality agreement,” with a business partner. LNG developer Venture Global Calcasieu, LLC (“Venture Global”) entered into an Engineering, Procurement and Construction Agreement (“Agreement”) with construction contractor Kiewit Louisiana Co. (“Kiewit”) to perform construction services on a liquified natural gas (LNG) export and liquefaction facility in Cameron Parish, Louisiana. The Agreement included a confidentiality provision that protected Venture Global’s confidential information.
Kiewit allegedly shared Venture Global’s confidential information with Shell, whom Venture Global considered to be a customer as well as a competitor. Specifically, Venture Global alleged that the confidential information included “detailed and highly sensitive information about the Facility’s design and construction that for commercial, regulatory, and public safety reasons cannot be made public or disseminated in an uncontrolled manner.”
Because the Agreement included a fairly robust and somewhat open-ended confidentiality provision, Venture Global was able to file a motion for a temporary restraining order (TRO) on August 2, 2024. Venture Global settled with Kiewit on August 13, 2024, and the terms of the settlement were not disclosed. This is notable, as it is rare that an NDA is enforced. Parties entering an NDA typically have a good faith basis for wanting to share confidential information with one another to achieve a mutually agreeable business purpose.
NDAs may be classified as one-way or two-way (or mutual) agreements. A one-way NDA protects only one party’s confidential information. A two-way NDA protects both parties’ confidential information. A typical NDA includes a number of standard clauses, including, but not limited to: information on the parties; a description of or definition of what constitutes confidential information; a disclosure period in which a party or both parties share confidential information; exclusions to confidential information; the term of confidentiality; and standard paragraphs like assignment restrictions and/or governing law.
While volumes can be written about the importance of each clause contained in an NDA, the description of the confidential information and the term of confidentiality are considered most critical. In the Venture Global matter, the definition of confidentiality in the Agreement was extremely broad, i.e., “information regarding Owner, its Affiliates or the Facility.” In some instances, such a broad description may hurt the owner of the confidential information, as this makes it difficult for the owner to specify the particulars of the confidential information that were disclosed to (and violated by) the recipient.
Therefore, a somewhat specific description of the confidential information is desired. If pressed to prove the mishandling of confidential information, it is easier to demonstrate that a recipient received specific information than more broadly generic information. Accordingly, documents and other materials being disclosed should be accurately labeled prior to being shared with the recipient.
The term of confidentiality is also an important component of the NDA. For example, when sharing trade secret information, it is imperative that the information be held in confidence for as long as the trade secret exists, and does not fall within one of the well-known exceptions to the definition of confidential information. In the Venture Global matter, the term was ten years, although a five year term is fairly standard.
Lastly, it is important to note that NDAs protect the exchange of information, but do not adequately address advancements made to technology as a result of that exchange. To ensure that the NDA being entered into provides the protections intended, it is highly recommended that each party to the agreement consult with an experienced attorney who can help navigate this sometimes complex process.
