NDAs often mark the beginning of a series of agreements between parties exploring joint ventures, acquisitions, or investments. The interplay between these agreements and the NDA can present challenges if the parties end up in court, as was the case between iSentium, LLC and Bloomberg Finance.
NDAs often mark the beginning of a series of agreements between parties exploring joint ventures, acquisitions, or investments. The interplay between these agreements and the NDA can present challenges if the parties end up in court, as was the case between iSentium, LLC and Bloomberg Finance.1
iSentium had a proprietary application, called “iSENSE,” which used analysis of market-related opinions on social media to predict market trends. Bloomberg expressed interest in incorporating iSENSE into its eponymous terminals and, in 2013, signed an NDA with iSentium to initiate a collaboration, leading to Bloomberg's use of iSENSE in its platform. However, in early 2016, the collaboration was terminated due to application revisions that rendered iSENSE incompatible with Bloomberg's terminals. Soon after, Bloomberg announced the development of a similar application that analyzed social media sentiment for market purposes. Suspecting the use of their trade secrets, iSentium sued Bloomberg in October 2017 for breach of contract and trade secret misappropriation.
The statute of limitations in New York is 6 years for a breach of contract claim and 3 years for a trade secrets misappropriation claim. In New York, the statute of limitations for bringing a breach of contract action is 6 years, and trade secret misappropriation is three years. Although iSentium's complaint was filed well within these timeframes, Bloomberg moved to dismiss the complaint as untimely – because there was a second contract the parties had signed. The “Developer Agreement for Bloomberg Application Portal” mirrored many provisions in the NDA and included prohibitions on reverse engineering iSentium's product and use of confidential information. However, it also contained a clause absent from the NDA:
No action, regardless of form, arising out of or pertaining to this Agreement may be brought by Developer [iSentium] more than one year after the cause of action has accrued.
The question arose: which agreement applied to the dispute? The Developer Agreement stipulated that it, along with the NDA, constituted “the entire agreement” between parties – but, in the event of a conflict, the Developer Agreement “shall control.” iSentium argued that the dispute did not arise out of or pertain to the Developer Agreement but stemmed solely from the NDA. The court, however, disagreed. As both the NDA and the Developer Agreement set forth rights and obligations with respect to confidential information and considering the Developer Agreement's “shall control” in case of conflict, the one-year limitation for iSentium to file claims applied – and had already expired.
Key Takeaways:
- When facing a potential dispute related to an NDA, it is crucial to examine what other relevant agreements may be in play.
- The “Entire Agreement” clause matters, as exemplified here, where it explicitly stated that the Developer Agreement takes precedence.
Footnote
1. iSentium, LLC v. Bloomberg Finance L.P., 2020 WL 248939 (S.D.N.Y. Jan. 16, 2020).
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