Microsoft NDAs Are Standard Practice in High Tech and American Commerce Generally

REDMOND, Wash., Nov. 7, 1997 — Responding today to a lawsuit filed by the attorney general of Texas, Microsoft Corp. said the provisions contained in its nondisclosure agreements (NDAs) are standard in the software industry and in American commerce generally. To demonstrate its point, Microsoft this week provided the Senate Judiciary Committee with copies of its NDA, as well as those of Sun Microsystems and Novell, and sample NDAs from lawyers’ form books.

Microsoft said it is confident the court will agree with its position once it has the opportunity to present its views.

“Confidentiality protection is particularly important in high-technology industries, where the principal assets of a company typically consist of intellectual property ideas, not any tangible assets,” said William H. Neukom, senior vice president for law and corporate affairs at Microsoft. “We either protect our intellectual property or we lose it. At the same time, we fully understand that the government needs to be able to gather relevant information as part of a focused inquiry. Our NDAs do nothing to prevent the government from doing its job.”

“It is a complete red herring to suggest that ours or any similar NDA would have a chilling effect on a government inquiry. In light of press reports and statements made by government officials, it appears very unlikely that anyone would be reticent about providing information as part of a legitimate government inquiry,” Neukom said.

Federal law provides strong confidentiality protection for information collected by the Department of Justice (DOJ) in the course of its investigations. Accordingly, Microsoft informed the Department of Justice four years ago and again recently that Microsoft does not interpret its NDA language in any agreements as requiring anyone to give notice to Microsoft before providing information to the DOJ. In fact, Microsoft has given the DOJ a letter that it can show to any concerned party confirming Microsoft’s interpretation of the scope of its NDAs.

A similar letter has not yet been given to the Texas Attorney General because there are questions about whether Texas state law provides the same level of confidentiality that federal law provides. Microsoft has previously offered to work with the attorney general’s office to determine whether similar accommodation might be possible and to develop procedures that would provide adequate safeguards for Microsoft’s intellectual property and other confidential information under Texas law.

Founded in 1975, Microsoft (NASDAQ
“MSFT”
) is the worldwide leader in software for personal computers. The company offers a wide range of products and services for business and personal use, each designed with the mission of making it easier and more enjoyable for people to take advantage of the full power of personal computing every day.

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