The beginning of a potential business relationship is an exciting time, whether one is an inventor with a new software application or an established business with a new joint venture in mind. It may be tempting to seize an opportunity to pursue an advantageous business relationship without waiting for paperwork to be produced and signed. However, it is essential that both parties agree to a non-disclosure and confidentiality agreement ("NDA") before any sensitive discussions occur.
NDAs serve a valuable role in memorializing the understanding that one or both parties will disclose certain proprietary and/or confidential information, which is to be protected from possible unauthorized use or theft by the party receiving such information. Only after such protections are agreed to in writing should the parties feel secure in sharing valuable trade secrets and business ideas with each other.
A Multi-Purpose Agreement
NDAs are useful in multiple contexts. For example, NDAs can:
- (1) help inventors, designers and developers safeguard new ideas, software applications, or inventions, while pursuing funding;
- (2) allow established businesses to pursue joint ventures, business combinations, or other strategic partnerships, while protecting their own business strategies, marketing plans, and other proprietary business approaches; and
- (3) enable businesses to hire third-party contractors or new employees, while protecting sensitive proprietary information that might need to be disclosed.
NDA Customization Recommended
The specific provisions contained in an NDA will often vary depending on the purpose of the future relationship, as well as the nature of the information that is to be shared/disclosed. Some NDAs will only protect the proprietary information of one party (e.g., an employee/independent contractor relationship or sponsor/influencer relationship). In contrast, other NDAs will be mutual and protect the confidential information of both parties (e.g., a joint venture). Depending on the nature of the discussions/underlying transactions, the type of information that is being disclosed, and the duration of the protection, the burden of proof for proving compliance and associated dispute resolution provisions may vary.
It is recommended that you retain qualified legal counsel to ensure that any NDAs that you sign provide adequate levels of protection to safeguard your interests while anticipating potential conflicts and other contingencies.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
