When You’re Signing More than an NDA – Challenges Presented by Multiple Agreements

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.

[1] iSentium, LLC v. Bloomberg Finance L.P., 2020 WL 248939 (S.D.N.Y. Jan. 16, 2020).

About the author:
Mari Bonthuis, Partner, Head of Litigation
Mari is a litigation partner at Sterlington and leads the firm’s dispute-resolution practice. She is a highly skilled litigator who has tried many cases in federal and state courts as well as before arbitrators. Mari has significant experience with partnership disputes, separation disputes including non-competes, employment agreements, insurance coverage, and securities litigation. Prior to joining the firm, she worked for 10 years in the New York office of Covington & Burling LLP after completing a federal clerkship in the United States District Court for the Eastern District of Pennsylvania. Mari received her J.D. cum laude from New York University School of Law, where she was a Dean’s Scholar, and her B.A. magna cum laude from St. Olaf College.

Sterlington’s Litigation Practice
The Sterlington litigation team has both breadth and depth of experience. The firm regularly represents clients at private equity firms, hedge fund firms, family offices, cryptocurrency companies, and start-ups in both pre-dispute and litigated settings, including arbitrations. The team has trial experience litigating in NY federal and state court, outside of NY, and AAA and JAMS arbitrations. Our litigators are admitted in NY, CA, FL, and PA and have represented a wide range of firms and individuals including:

• An asset management firm in litigation against a former partner who usurped business opportunities
• A former hedge fund partner in arbitration to recover wrongfully withheld management fees and carried interest
• The primary owner and board of a closely-held company in Delaware litigation brought by a minority shareholder
• An early founder of a consumer goods company in a shareholder dispute
• A partner in a private equity firm challenging termination and severance
• The CEO of a start-up business who was terminated without cause and threatened with litigation

Coming from prominent firms such as Covington & Burling, Simpson Thacher & Bartlett, Walkers, and Manatt, Phelps & Philips, the team has the bench strength to tackle litigation of any size and complexity in multiple jurisdictions. We make extensive use of our integrated deal teams and specialists for support on litigation matters, and we welcome alternative fee arrangements where possible.

Sterlington’s Legal Outsourcing solution
Sterlington’s Legal Outsourcing solution provides end-to-end contract management for NDAs, CDAs, MSAs, engagement letters, non-reliance letters, service agreements, vendor agreements, and all other contracts.