The name itself sounds so powerful: Non-Disclosure Agreement. How could anything be disclosed without repercussion if you have one of these? So you execute your NDA, and voila -- you're all protected and can hand over the farm without a worry. Not really. Before letting someone take free reign into your facility for information, consider a few misconceptions about NDA's:
1. My NDA is standard
Of course many NDA's have common clauses, but there are nuances
that can be added or removed that can have a big impact. Sometimes,
business owners will skip the dull parts like definitions, but how
information is defined will often vary between NDA's. A
definition that is too narrow can leave a business exposed to risk
of out-of-scope information being left unprotected. A definition
that is too broad can cause compliance headaches. Even a
well-tailored definition of information may not be enough. Look for
exceptions which can be riddled throughout an NDA, especially in
areas that describe how information will be used.
2. Even irrelevant information is
covered
You have a well-crafted information definition and have cared for
exceptions, but you still need to stay on your toes. Realize that
an NDA doesn't protect disclosure at all. The protection is up
to you. An NDA will merely act as a tool to compensate you for a
wrongful disclosure. Think about the fact that you hire the best
employees, non-disclosures are signed, and codes of conduct are
attested to, yet the doors and drawers stay locked in the HR and
Accounting offices. Why? - Because information can be very
sensitive. You should also consider whether you already have
agreements with third parties to keep their information
confidential. Covering your bases in an NDA is a great start, but
it's still up to you to decide the sensitivity of information,
what other agreements may conflict with your new NDA, and what the
recipient ultimately receives.
3. It doesn't matter how information is
provided
Now that you're settled on what the recipient can access, think
about how you'll make your information available. If you're
presenting a business idea, you can tell a great conceptual story
without giving away the secret sauce. A software demo can be given
without the source code like a tasty sample can be given without
the recipe. So, if you must grant access to your information, ask
whether the information can be delivered remotely so that other
information is out of reach. Also consider whether a summary of the
information makes more sense than providing raw data.
Consulting an attorney before signing, or asking someone to sign, a non-disclosure agreement can help ensure that your information is communicated by the most appropriate means.
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.
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