Non Disclosure Agreement (Mutual)
Start-ups often begin with a simple idea. You might think of an innovative solution to a problem or recognise a gap in the market that others haven’t noticed. At this early stage, it’s understandable if you want to go stealth and keep your idea a secret.
However, in order to capitalise on your idea, you’re going to have to share it at some point.
This is where a non-disclosure agreement or NDA can be useful.
An NDA is a way to share your sensitive information while protecting your ideas and know-how.
What is an NDA?
An NDA (also known as a confidentiality agreement) is a legal contract, which should be used when sensitive information needs to be shared between two parties. It ensures that the person or organisation who gains access to sensitive information doesn’t disclose it to a third party.
NDAs are private agreements between the parties and do not require registration. They are often used to protect confidential information and trade secrets.
Unlike patents, NDAs can last indefinitely. The Coca-Cola recipe, for example, has been kept secret for well over 100 years.
A good NDA should state why you are sharing confidential information without specifying the confidential information itself. For example, you might state that the purpose of the NDA is to evaluate technology or to seek expertise for a new medical invention.
When to use an NDA
You might use an NDA when interacting with marketing and PR firms, manufacturers, or investors.
Some of the best times to use an NDA are when you want to bring someone into your organisation, such as partners, employees or contractors. The NDA can be linked to other agreements signed at the time such as ownership agreements.
Also consider using an NDA as an alternative to patent protection. For example you may want to keep your information secret instead of having it exposed as part of a patent specification, or the product has such a short lifespan that patent protection isn’t feasible.
It’s important to note many investors that operate in the start-up ecosystem prefer not to sign an NDA. They may believe the NDA is a sign of a lack of trust, or that navigating around the NDA will be too difficult for the investor.
Non Disclosure Agreement with Schedule
A detailed mutual non disclosure agreement with a schedule between a company and employee.
The agreement includes clauses covering:
- Confidential information
- information exchange
- Non-confidential information
- Term of agreement
- intellectual property rights
- other agreements/disclaimers
- General provisions
- Restraint of trade
- enforceability provisions.
8 pages long.