Mutual NDA Acknowledges Potential Access by Third Party

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Global Watchtower

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Posted by Donald A. DePalma on February 10, 2006 in the following blogs: Translation and Localization, Web Globalization, Business Globalization, Technology, Interpreting, Market Data, Global Marketing, Best Practices, Supplier Business Issues
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Back in July we wrote of the GALA survey of language survey providers that "survey respondents fear having one of the largest LSPs now provide the most widely used translation memory tool. They worry that this privileged supplier role will give SDL access to too much information about potential contracts and existing deals."

Over the last few days we have learned of two SDL technology users (FIRM) that include a clause such as the following in their NDAs with language service providers (LSP): "FIRM utilizes the Trados GXT solution for translation workflow activities. Trados GXT is licensed, hosted and maintained by SDL. LSP acknowledges that: (a) FIRM will use, process, and store price and other confidential data provided by LSP via Trados GXT; (b) SDL may have access to LSP's Confidential Information in fulfilment of its obligations under its hosting agreement with FIRM; and, (c) FIRM is not in breach of its obligations under this NDA because of such use, disclosure, or access."

We at first suspected that this clause originated in a pre-acquisition Trados contract, when software-only Trados posed no threat to LSPs. However, it turns out that 2 separate legal teams came up with very similar language to alert their providers to the situation. In any case, this is an issue that buyers of language services who intend to have SDL host its translation workflow software products (SDL TMS, GXT, or TeamWorks) will confront as they engage providers for translation. Our straw survey of LSPs indicates that few would sign such an agreement without strong assurances that SDL's hosting team would not share any confidential pricing or pricing information with its services group.

Our advice to prospective users of SDL hosting services has been to ask SDL to provide a "clean room" hosting center that protects the sanctity of LSP data and to guarantee that the hosting team has no connection to SDL?s language services division. This is a good practice regardless of the company that hosts your data.

We also checked with SDL CTO Keith Mills who told us that the company is working to address this issue in 2 ways: 1) with contractual protections; and 2) through security enhancements embedded in the hosted products that encrypt all data, even for direct database inquiries. Mills said that his intended level of security is such that even SDL's hosting support staff cannot see the data, but if they do need access to perform their contractual obligations, it can only be provided with the customer's explicit action to set such permissions in the SDL software. He added that "CEO Mark Lancaster has made great strides to ensure that the technology side of the business is separate from the language translation services side. The only point of cross-over is from a hosted solution point of view and that responsibility lies with me." And customers could, of course, finesse the whole disclosure issue by not having SDL host the product, instead installing it behind their own firewalls.

The good news is that lawyers the world over are doing their job to secure their client and provider data, while SDL's chief scientist is aware of industry concern about the acquisition and is working behind the scenes to build a firewall between SDL hosting and language services.

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