Wednesday, March 12, 2008

Disputing the Fallacies against NDAs

Why are nondisclosure agreements or NDAs necessary? Primarily, to protect one’s business. In the highly competitive business world, a nondisclosure agreement is a safeguard against information theft.
Any employer or business entrepreneur knowledgeable enough in his business will understand that an NDA is a great deterrent against people who will try to rob you of ideas and eventually, of prospected clients.
Reading the article, “Startup Reality Distortion No. 3 – The Fallacy of the Nondisclosure Agreement”, posted in April 18, 2006, however, will give you a different, opposite idea of an NDA is really all about. Written by an entrepreneur, the article discusses some of the notions we have of the NDA which the writer tried to refute as false.
The article claimed the following fallacies against the NDA:
  1. That investing time, effort, and money to protect an idea is not good for a startup business.
  2. That revealing your ‘secrets’ to others will drive them to pursue your idea for their own end.
  3. That the NDA is irrelevant and cannot give you the protection you need.
  4. That the chances to get people to agree and sign an NDA are low
In a way, the writer may have his reasons for saying those things. But I would disagree with his claims that an NDA cannot provide protection for one’s business. On the contrary, it really does.
Maybe it would help if one can formulate a strong nondisclosure agreement to ensure better protection for business.
Maybe adding the following provisions to a NDA can help make it stronger and much easier to be enforced. Here are the provisions:
  • A definition of proprietary information
  • An agreement to return all company materials, including notes and computer files, upon termination
  • An agreement that in its work with the employer, the employee will not use or reveal proprietary information of third parties such as former employers or business partners
  • no “moonlighting" clause, prohibiting the employee from engaging in other business ventures while employed with the company
  • The ever-popular at-will disclaimer.
I hope this information would help people, especially businessmen, in making every available means to protect their interests.