I’ve been having some fantastic conference calls with several people who are all independent contractors and qualify as Web workers in one form or another. Out of the blue, one of them asked if we’d be offended to sign an NDA (non-disclosure agreement) for a project she’s working on – and has already discussed with us pretty extensively. We’ve even given her our input on on the project.
Yes, of course, I’ll sign the NDA, I said. I’ll sign it because I want this person to feel comfortable discussing her project openly with all of us. I have no interest – and no capacity – to steal her idea. And I understand that you have to protect your assets.
This got me thinking more about NDAs in more depth. So I turned to a lawyer type to get some inside skinny on NDAs. Here’s my Q&A with Tate Stickles, Attorney at Law at Grossman Law Group in Miami.
WWD: What is an NDA – in layman’s terms?
Stickles: A contract between parties whereby they agree not to disclose the confidential information covered by the agreement. The kinds of information covered typically include non-public confidential, proprietary information and trade secrets.
WWD: When a Web worker (developer, consultant, etc) is asked to sign an NDA, what things should they consider before signing?
Stickles: What kind of information is covered, and is it clearly set forth in the NDA? What kinds of confidentiality obligations are you looking at? When are you allowed to disclose the other party’s confidential information? Typically there are exceptions for when you’re ordered to by court order or by law. How long is the confidentiality obligation? What happens to the confidential information at the end of the relationship? Is it returned, or does the NDA lay out the approved methods of destruction? Are any non-compete provisions also thrown in?
WWD: When should a Web worker ask for someone else to sign an NDA?
Stickles: If they have any valuable information of their own that they want to protect. For example, we commonly see developers that have their own set of development tools and trade secrets they’ve come up with over time that extremely valuable to them. That developer would not be out of line asking another party to sign a NDA in order to protect their assets.
WWD: How enforceable is an NDA?
Stickles: Generally they are very enforceable. Every contract is unique, but you should never sign a NDA assuming it’s not enforceable.
WWD: What is someone refuses to sign your NDA – what should you do/not do?
Stickles: The obvious answer is to not disclose any of your confidential information to them. You’re also going to be looking at a business decision on whether you can continue the relationship without the other party having access to your confidential information.
WWD: How retroactive can an NDA be? That is, what if confidential info is revealed and THEN someone asks you to sign an NDA. Can that work?
Stickles: It’s not preferable, but it can work provided the NDA contains language that the term of the agreement and the confidentiality obligations start as of the date of first disclosure of the confidential information.
WWD: Is there or should there be an expiration date on an NDA?
Stickles: You can put a term on how long the agreement is binding, but the “expiration date” would actually be how long the other party is obligated to keep your information confidential. Two to three years is the norm, but there are exceptions. Trade secrets are another matter though, and if they are part of your confidential information you should ensure that the other party never discloses your trade secrets for so long as they remain a trade secret.
How often have you been asked to sign and NDA and do you always do it? If not, why not? And how often do you ask others to sign an NDA? Has anyone refused? If so, what did you do?
P.S. An interesting read on trade secrets litigations is The Trade Secrets Blog.