A non-disclosure agreement (NDA), also known as a confidentiality agreement, is a contract between two or more parties that is executed in order to protect specific company information. In a non-disclosure agreement, one or more parties agree not to disclose certain information to third parties. Typically, NDAs are made between an employer and an employee, a company and an independent contractor or two companies. An NDA can be unilateral or bilateral, depending on the situation. Priori’s curated legal marketplace makes it easy to find and hire a lawyer who specializes in contracts and intellectual property, and who can help you draft an NDA to protect your business.
Typical provisions in an NDA include:
Definition of “Confidential” and “Proprietary” information. For an NDA to properly protect your information it must clearly define what information is confidential (and therefore prohibited from disclosure).
Duration. A restriction of an indefinite term may not be enforceable, so many NDAs include a term during which disclosure is prohibited.
Exceptions. NDAs often include a list of situations in which disclosure is not prohibited, which, among other things, can include information already known to the recipient when the NDA is executed, information disclosed by a third-party who has the right to disclose, information already publicly known or information made publicly known after the execution of the NDA through no breach of the recipient.
An experienced contract attorney that understands your business’s needs can draft a non-disclosure agreement that appropriately defines confidential information, and therefore minimizes the likelihood that a breach will occur and maximizes your chances of victory in court in the event of an unauthorized disclosure.
Depending on the complexity of what you need protected and the number of parties involved, the cost of having an NDA drafted can vary significantly. When you hire a lawyer in the Priori network, drafting an NDA typically costs anywhere from $175-$1,500.
In order to get a better sense of cost for your particular situation, put in a request to schedule a complimentary consultation and receive a free price quote from one of our lawyers.
What if I use my employer’s property to create a new product that is completely different from what is protected under the NDA?
Even if you are not technically disclosing the property described under the NDA, you may still be in violation of the agreement. Many non-disclosure agreements contain clauses that prevent the recipient from benefitting in any way from the disclosure, except as specifically permitted under the agreement. The recipient of software source code, for example, should not be permitted to use the source code as a basis for developing its own software, even if the resulting software does not on its face infringe the copyright of the original software that was represented by the disclosed source code.
I’m trying to raise money and asked an investor to sign an NDA. She said no. Why not and what do I do?
Venture capitalists almost always refuse to sign NDAs. Among other reasons, they are typically reviewing many similar possible investments at the same time. If they signed NDAs before being pitched by every entrepreneur, they would be hamstrung by a patchwork of non-disclosure obligations and would not be able to do business effectively. So, proceed with caution -- make sure you have done some background research on investors before telling all, be thoughtful about what you reveal in your pitch deck and protect your intellectual property via other channels, like patents.