Protect your IP
Guidance to Non-disclosure agreements (NDA), sound advice to novice entrepreneurs, advisors and investors.
1. Before you share information
The best way to keep something confidential is not to disclose it in the first place. If you do need to share information you should use a non-disclosure agreement (NDA). This could happen when you speak to potential partners like:
You may have to tell people about your idea or your business to get advice. This could be from:
•or a marketing agency
It is important that you don’t assume conversations with advisors are automatically confidential.
An NDA is a legal contract. It sets out how you share information or ideas in confidence. Sometimes people call NDAs confidentiality agreements.
Your IP attorney or solicitor can advise on confidentiality and draw up an appropriate NDA for you to use.
2. What to consider
You should decide what your NDA covers. It could protect only information which is recorded in some form and marked ‘confidential’. It can also protect information you share in meetings or presentations.
A good NDA restricts the use of the ideas and information to a specific permitted purpose. This could be the evaluation of your idea or the discussion of a joint venture. Specify that purpose in the NDA as precisely as you can. You can always widen the permitted purpose later. You won’t be able to narrow the restriction on the use of your ideas or information later.
You should be realistic. The person you are talking to might need to share your information with others. This could be their employees or professional advisors. They may also need to copy your information for this purpose. Make sure that these disclosures to employees and professional advisers are made in confidence.
Think about how long the confidentiality should last. It’s common to see it limited to 3 or 5 years. After that time they will be able to use and disclose your information. Once information is made public in anyway, an NDA can’t be enforced.
Some information could be kept confidential forever. Examples of these are:
•lists of customers
•personal information about the individuals involved in a project
Some companies or organisations could ask you to sign a document agreeing that they will not have a duty to keep your ideas or information confidential. If that is the case, you need to decide whether to risk disclosing your ideas to them.
3. Types of NDAs
NDAs can be one way or mutual. Use a one-way NDA if only you are disclosing information and a mutual NDA if both parties are.
If the NDA is one-way only, it may need to be executed as a deed to make it enforceable. This is easy to do, so don’t make what should be a one-way agreement into an artificial mutual agreement.
If you and the other party to the NDA are not both in the same country, the NDA will need to state which law governs the agreement. Remember England and Wales have a different legal system to Scotland. It will also need to state in which courts it can be enforced. It is important that the courts of one country are not given exclusive jurisdiction. You may want to enforce the NDA in a different country if an unauthorised disclosure is made there.
4. Before your meeting
Don’t disclose your ideas or information until the recipient has signed and returned the NDA to you. Without an NDA, you are taking the risk that others could use your ideas or information without your permission.
Always check any NDA which another party asks you to sign. Make sure it doesn’t unfairly restrict your future activities.
You could ask your potential partner or advisor if they have an NDA you could both use. Read it carefully as it might serve their interests rather better than it serves yours. If in doubt, take professional advice.
Make sure the right person signs the NDA. This could be:
•a director of the recipient company
•an officer of the recipient institution
•someone senior who has authority to give the undertakings in the NDA
5. During your meeting
You should record what you disclose at meetings or in presentations. Ask people present to sign a paper copy of a presentation, or a technical drawing to prove they have seen it.
Record what information you disclose in informal situations such as discussions or conversations. Note when and where that took place.
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