

Beware the NDA - vcexperts
https://vcexperts.com/buzz_articles/118

======
true_religion
I'll only sign a one-way NDA if I'm in a weaker bargining position---example,
I want to buy something from you or use some of your knowledge.

If its just consultancy, then you'll have to have a two-way agreement because
surely I'm going to comment on your implementation for free and I can't have
my expert knowledge bound up and sold off in training manuals now can I?

------
rapind
As a developer I'm often approached by individuals interested in my skill set
but who insist upon an NDA before going into any details.

I've always assumed this is a non-issue (unless the product is similar to
something I'm already considering building).

Am I being naive? Should I be signing these? Do I need a lawyer (which
obviously I'm not going to bother with 90% of the time)?

~~~
floppydisk
Every place I've worked has required its employees to sign some form of non-
disclosure agreement, it's pretty standard practice--once you're an employee.
Prior to that though, everyone who hired me was able to explain (without an
NDA) the big picture of what they were doing. If people can't explain what
they're trying to accomplish without legalese, I'd be a little leery.

The anecdotal corollary to this stems from several friends who attended school
at a different university. They had latest and greatest business ideas and
would make their friends sign NDAs, for each new idea, before they'd even
whisper what it was they're doing. To date and current knowledge, none of them
have started their own company or actually pursued those grand visions hidden
away by legalese.

That being said, (FWIW IANAL), if the people actually have a built product or
devised a demonstrable new process or possess some other physical IP (eg: book
of math proofs they've devised proving worm hole travel) and you'd be working
on it/with it/viewing it, sure an NDA might make sense. I.E. They actually
have a physical asset to protect. If they're just spouting off they're next
great business idea and won't even talk to you until you're wrapped in
legalese, I'd take a second look before jumping in.

~~~
rmc
"It's standard" is a lie often told to employees to weaken their bargaining
position. The only time I've seen and NDA was for a client that was insane.
NDAs are not standard. Negotiate harder.

~~~
Daniel_Newby
Seriously? You think its standard for people to protect trade secrets out of
the goodness of their hearts?

I would not discuss a valuable invention with my dad without an NDA.

~~~
greyfade
I feel that if you need an NDA, more than likely, you're not the first person
to come up with the idea, and chances are, someone else is already executing
it. The NDA would just get in the way of getting the resources you need
together quickly enough to execute before others.

And if you wouldn't discuss it with your own father, I'd put forward that
perhaps you have some deeper trust issues.

~~~
Daniel_Newby
Customer lists, marketing test results, sales breakdowns, password databases,
personnel files, you name it. Everybody is put under NDA to maintain these
secrets.

Telling my dad about an invention without putting him under an NDA makes it
unpatentable. It has nothing to do with trust. If you do not observe the
proper legal forms, you are flushing IP down the toilet.

~~~
greyfade
I was speaking in the specific context of ideas. Clearly, sensitive data
should be protected, and an NDA is a good legal control for that.

But I don't believe that an idea is worthy of an NDA, and therefore that so-
misnamed "IP" would be "flush[ed] down the toilet" just because you happened
to discuss the topic with a family member.

Rather, I believe that what matters is whether and how you implement the idea.
Being first to market gives you the added security of fully understanding the
idea and being able to improve it as you go along - while competitors are left
behind trying to understand the idea. Execution, as they say, is everything.
You don't need a government-granted monopoly to do that.

(That said, I think the whole government-granted monopoly idea is
fundamentally flawed.)

~~~
jasomill
Except in the context of software development, specifically, it's not
generally just "an idea." It's the sum total of all unpublished and
unannounced information of unreleased products that you're being given access
to as a developer. There may not even be any plans to file patents: you have
to take affirmative steps to maintain trade secret protection, as well. But,
among other things, trade secrets have to be reasonably specific, certainly
more so than "everything you learn about our products in the course of
employment", and, well, "secrets" to begin with (not merely "unannounced" or
"unpublished").

Confidential business information like customer lists, on the other hand,
tends to be protected even in the absence of a written agreement; a good
contract lawyer can quickly pick out the potentially troubling bits of an
employment-related contract from the mass of "mostly harmless" boilerplate
that merely restates your obligations under various laws (often including
amusingly obvious items like not stealing _physical_ property from the company
and returning company-owned equipment upon request).

Finally, many companies have agreements with third parties that require
measures to ensure employees and contractors given access to third-party
confidential information (of various sorts) hold it in confidence.

------
Zenst
Any NDA or indeed anything you sign that goes out of scope with it's initial
intentions is something to avoid period. a NDA is just that, a seal of
confidence that you wont reveal what your about to be told, to go beyond that
is not a NDA but a form of contract. Whilst contract law varies country to
country, as a golden rule no contract is valid unless some money has changed
hands. Remember NDA's in many ways are poor mans patent protection and
generaly pertain to company secrets that they can't patent. Other instances
would be if your doing a security assesment and have to sign a NDA promising
not to publicly reveal what you find. Also note NDA's have an expire date. So
if your not too happy with whats in the NDA dont sign there and then and get
it checked, and if you are happy then don't sign and get it checked. No NDA I
have ever come across was written there and then and to be expected to sign it
there and then is equaly not a good sign. As with any rule there are exeptions
as they are rules and not laws of physics.

~~~
caw
Can you elaborate more on the expiration? The only NDAs I've seen don't apply
after the data/process/methodology/trade secret is made public. They don't
have something like 1 year after termination. For many companies, this
information will never be made public, and this would of course be an non-
expiring NDA.

So what expiration should an NDA have?

~~~
dctoedt
Concerning expiration [1], many NDAs distinguish between "trade secrets" and
"confidential business information":

* Basically, a trade secret is non-public information that is the subject of reasonable efforts to keep it confidential, AND that is shown to provide an _economic_ advantage to those possessing it versus those not possessing it [2].

* NDAs often say that trade secrets don't lose their protection until they're no longer secret [3], typically as defined by the "frequent five" exclusions [4].

* NDAS might also say that other confidential information (for example, pricing) loses its protection in X years [1], where 1 < X < 5.

* Keep in mind that some types of information must be kept confidential by law, such as protected health information, without regard to an NDA.

[1] [http://www.techlawnotes.com/confidential-
information/#outlin...](http://www.techlawnotes.com/confidential-
information/#outline-container-3-5)

[2] [http://www.techlawnotes.com/confidential-
information/#outlin...](http://www.techlawnotes.com/confidential-
information/#outline-container-1-2-1)

[3] [http://www.techlawnotes.com/confidential-
information/#outlin...](http://www.techlawnotes.com/confidential-
information/#outline-container-3-6)

[4] [http://www.techlawnotes.com/confidential-
information/#sec-1-...](http://www.techlawnotes.com/confidential-
information/#sec-1-9)

