NDAs for BC Tech Companies: Protecting IP in a Global Market

British Columbia's technology sector — concentrated in Vancouver's growing tech corridor — operates in a global market where intellectual property often crosses international boundaries daily. For BC tech companies, protecting proprietary code, algorithms, customer data, and business strategies requires NDAs that go beyond the standard template. This guide addresses the IP-specific challenges that tech companies face and how to structure confidentiality agreements accordingly.

IP Ownership: Employment vs. Contractor Context

Before addressing confidentiality, every BC tech company needs clarity on a foundational question: who owns the intellectual property created in the course of the working relationship? The answer differs significantly depending on whether the creator is an employee or an independent contractor.

For employees in BC, copyright in works created in the course of employment belongs to the employer under s. 13(3) of the federal Copyright Act. This applies to software code, documentation, and other works created as part of the employee's job duties. However, inventions are treated differently — unless the employment contract expressly assigns inventions to the employer, an employee may retain rights to patentable inventions even if developed using company resources and during work hours (though this varies with the circumstances).

For independent contractors, the default rule is reversed — the contractor retains copyright in any work they create, regardless of who commissioned or paid for it. This means a BC tech company that hires a freelancer to build a feature, write documentation, or design a system interface does not automatically own the resulting IP unless the contract expressly assigns it.

Trade Secrets in BC: The Law of Confidence

British Columbia does not have a dedicated Trade Secrets Act (unlike some US states). Protection for trade secrets in BC relies on the equitable law of confidence and contractual protection through NDAs. To qualify as a trade secret protected by the law of confidence, information must:

• Have the necessary quality of confidence — it must not be public knowledge or freely available.
• Be imparted in circumstances importing an obligation of confidence.
• Be used or threatened to be used without the owner's authorization to the detriment of the owner.

For technology companies, protectable trade secrets typically include: source code, training data for AI/ML models, proprietary algorithms, encryption keys, unreleased product roadmaps, and customer data architecture. A written NDA provides a clear contractual basis for protecting these assets — it supplements rather than replaces the equitable duty of confidence, giving access to contractual damages and injunctions.

Structuring NDA Terms for Software Companies

Technology NDAs require several provisions that general commercial NDAs often lack:

• Source code specificity: Identify source code as a specific category of confidential information, including partial code, architecture diagrams, API specifications, and build scripts — not just compiled executables.
• Data protection: If confidential information includes personal data, reference applicable privacy legislation (PIPEDA federally, or BC's Personal Information Protection Act) and specify that the receiving party must comply with those statutes in handling the disclosed data.
• Technical measures: Require the receiving party to implement reasonable technical and organizational measures to protect confidential information — particularly for cloud-based or API-accessible information.
• Residual knowledge carve-out: Address whether the receiving party's personnel can use generalized technical skills and knowledge retained in unaided memory after working with the disclosing party's confidential information. Many tech NDAs explicitly permit this to avoid restricting normal professional development.

Reverse Engineering Clauses

For software companies sharing code or technical documentation under an NDA, it is important to address reverse engineering explicitly. A well-drafted NDA should:

• Prohibit the receiving party from decompiling, disassembling, or reverse engineering any software shared as confidential information.
• Specify that such prohibition applies to partial disclosure — not just to complete software packages but to any portion or element shared under the agreement.
• Carve out the limited circumstances where reverse engineering is legally permitted (e.g., for interoperability under copyright law) to avoid an overreaching prohibition that might be challenged as unenforceable.

Open-Source Carve-Outs

A critical but frequently overlooked provision in tech NDAs is the open-source carve-out. Many technology products incorporate open-source components — libraries, frameworks, and tools licensed under MIT, Apache 2.0, GPL, or other open-source licenses. A well-crafted tech NDA should:

• Exclude from the definition of confidential information any code or technology that is subject to an open-source license.
• Require each party to disclose the open-source components included in any confidential information they share, along with the applicable licenses.
• Address copyleft (viral) licenses like the GPL separately — if a proprietary codebase incorporates GPL code, it may need to be made open-source itself under the GPL's terms, which can create significant IP complications.

Jurisdiction Selection for BC Tech NDAs

BC tech companies often deal with partners in the US, UK, EU, and across Asia. The choice of governing law and dispute resolution forum can significantly affect how the NDA is interpreted and enforced. Key considerations:

• Governing law: Specifying BC (Canadian) law gives the disclosing party access to Canadian courts, which are generally efficient and well-suited to commercial IP disputes. However, if the receiving party is in California, enforcing a Canadian judgment requires a separate recognition proceeding.
• Arbitration: For international tech NDAs, arbitration (e.g., ICC or BCICAC arbitration in Vancouver) is often preferable — arbitral awards are enforceable in most countries under the New York Convention.
• Injunctive relief carve-out: Always include a provision confirming that either party may seek emergency injunctive relief in any court of competent jurisdiction, regardless of the arbitration clause. NDA breaches are time-sensitive, and waiting for arbitration could result in irreversible harm.

Duration: How Long Should a Tech NDA Last?

For most BC tech companies, confidentiality obligations should distinguish between different categories of information by duration:

• Source code and core algorithmic trade secrets: perpetual or indefinitely (the information remains confidential for as long as it remains out of the public domain).
• Business and financial projections, marketing strategies: 3 to 5 years.
• Pre-release product information: until public release, plus 12 months.
• General confidential information: 3 years post-disclosure is typical for tech partnerships.