Seven Reasons You Would Want an NDA for IT Development
February 4th, 2015
It is easy to get extreme with NDAs. You can either abstain from them altogether or fall into a trap of signing NDA for every little tiny bit of work.
As usual with extremes, both approaches are faulty.
Sign no NDA and you might get lucky and nothing bad happens. However, chances are that someone might decide to steal your idea. Sign NDA for everything - imagine the pile of documents you'll have to deal with (besides, it's easy to forget something).
So why do you need to think about NDAs? Here are seven reasons.
- Have you moved from discussing “what” to “how”? That’s the time when you might want to think about an NDA. There are many problems that need to be solved in the world (the “what”) but it’s your unique “how” that is going to bring you the money. So, first of all, don’t share your ingenious idea with everyone you meet, but if you have found someone who can help you, keep the idea of NDA in mind.
- Investors have their reasons for not wanting to sign NDAs, so it is not a good idea to ask them to sign one (you might end up losing the financial backup). However, if you are talking with someone besides an investor, the NDA might be a good thing to discuss along the way. Unlike investors, vendors or independent contractor developers have little reason to refuse sign the confidentiality document. Just don’t make them sign NDAs over every little detail that isn’t vital to the project.
- If you have invested quite a substantial amount of money in your innovation, non-disclosure agreement is a good thing that would lower the risk of “donating” your work and money to public on accident.
- Reached the stage where you’re sharing documents or data? This is the time where your idea of “how” is at a greater risk of being copied, reworked, or otherwise used in ways you might not like or want. Because of that, when NDA is signed, that clarifies the boundaries for all parties.
- Might save you a lot of money on legal fees afterwards. A lengthy litigation process might not be necessary if you have the signed NDA that would support your company’s case in the court.
- NDA can also be helpful in protecting your business relationships. While not always legally enforceable to prohibit other party from interfering with your employees, clients, and other key business relationships, this might prove beneficial. This kind of NDA is usually signed for a period of time, say two years.
- If you have trade secrets like Coca-Cola’s secret recipe, that is also a reason to think about preparing and asking your employees (or whoever would have access to this trade secret) sign NDA. It might not completely protect you from problems, but at least you will be legally backed.
With all this in mind, there are also times when NDA would be a useless piece of paper that would only inhibit productive cooperation. Usually business relationships are based on trust while NDA is an inherent sign of mistrust. If there is a trade secret that doesn’t have to be mentioned when discussing the business idea, better just keep it to yourself rather than telling about it to your business partner and then have them sign an NDA.