Do You Need an NDA?
“It’s not me who can’t keep a secret. It’s the people I tell that can’t.” – Abraham Lincoln
How do you know who needs an NDA?
An NDA can protect both you and the business. The question is whether you need one or not and who needs an NDA in general?
Do you have any friends or acquaintances who cannot keep a secret? Yep, we all know that person who has to be the one to dish out the latest gossip, the one who can’t wait to spill the beans. It certainly would be nice if there were a way of keeping those people from giving away YOUR secret. Luckily, there is a way… at least in business. Your friend might be hesitant to sign a document promising not to squeal, but in business, the NDA can be a tremendous asset if you deal with sensitive information.
Nondisclosure agreements (NDAs), also known as confidentiality agreements, are common in business, as they offer protection of confidential information, trade secrets, and other such sensitive materials meant to be kept under wraps. Whether it is client information, sales and marketing plans, a new product, or some sort of unique process, the use of an NDA means your secrets will continue to be your secrets.
Here are a few additional examples of ideas that could be protected by NDAs:
- Inventions or plans for an invention
- Business plans
- Financial information
- Software programs
- New technologies
- Recipes or formulas
- Proprietary information
Usually the signing of an NDA is enough of a deterrent for people to keep their traps shut, but in the case that they don’t, you’ll have legal recourse and potentially, the ability to sue for damages for lost profits, or worse in some cases.
In its most basic form, an NDA is a legal obligation in a signed contract that creates a confidential relationship between a person or entity that holds the secret and a person to whom the secret will be disclosed. Think of the doctor-patient relationship and the right to privacy of medical records, or the attorney-client privilege in regards to sensitive legal information and advice – these are essentially covered by some form of confidentiality agreement or NDA.
Certain products are protected by copyrights and patents, but ideas are a bit more tricky. That is where an NDA can fill the gap. Ideas that are construed as public knowledge cannot be included, but if you do have an original idea that is going to make you cash, and you plan on sharing any part of that idea with someone, then an NDA is good idea.
In the movie, The Social Network, we saw the story of how Facebook came about. A main story line in the movie revolved around an intellectual property dispute between Mark Zuckerberg and twins, Cameron and Tyler Winklevoss. The Winklevoss brothers had hired Zuckerberg to consult on their software for their social network brand, and they later claimed that Zuckerberg stole their idea and their business model. Had the Winklevoss twins put together an NDA for Zuckerberg to sign, perhaps they would be worth the $47 billion that Zuckerberg is reported to have.
So the next time you have a big idea that you are considering acting on, take the necessary steps to protect yourself if you are going to be sharing your intellectual property with anyone else. Think big before you are big because nobody starts big – you must grow to get there. Giving away your secrets before you realize just how valuable they are could cost you. I am not sure that anybody could have predicted back in 2004 when Facebook started that it would grow to a worth of $300 billion, which is it’s current value according to USA Today.
Susan Sly is a best selling author, speaker and entrepreneur. She has appeared on CNN, CNBC, Fox, Lifetime Television and the CBN. Susan is the mother of five children and resides in Scottsdale, Arizona.
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