“We need you to sign our NDA before we can discuss the project with you.”
From time to time a potential client will say this or something like it. I get it, they want to protect their intellectual property from the competition or the general public. This is an understandable concern, and we don’t take our client’s concerns lightly. We work with some startups, and they seem to be more sensitive than most companies. Larger companies are oftern trying to protect something they’ve already invested a lot of time and effort into. However, NDAs are not a great tool for protecting information. Mark Suster covered this in 2009, saying…
You shouldn’t worry about NDAs because they’re mostly unenforceable or unprovable anyways.
No matter the reasoning for deciding to sign an NDA, being careless about signing them can lead to trouble, so we’ve decided to simplify the process. Here’s the how and why.
Most NDAs Are Too Complicated
The problem is no two NDAs are the same. Different attorneys put emphasis on different things, or use slightly different language to describe similar things. If you sign every NDA someone asks you to it can get messy real fast.
At Nine Labs if we sign an NDA for the courtship phase we use this simple one. Here’s the entire thing:
Nine Labs hereby agrees upon receipt of materials from __________________ (“Client”), which contain information of a confidential and proprietary nature, to make all reasonable efforts to prevent unauthorized disclosure, copying or publication of concerned information and to protect it as its own. Without limiting the generality of the foregoing, Nine Labs agrees to take such actions as may be reasonable to limit disclosure by advisers, associates and/or co-workers who may gain access to the concerned information.
Nine Labs agrees to use the information solely for evaluation of the project concerned and for no other purpose without the prior written permission of Client.
Nine Labs shall not be held responsible for information already in the public domain, information which becomes public domain through no action or omission of Nine Labs, or information obtained legally from a third party.
This non-disclosure agreement ends one (1) year after date of signature.
That’s it. No craziness. Simple enough that a layman can read and understand it.
Reviewing Legal Documents Is Expensive
Signing different NDAs with different bits of language simply isn’t practical for a small team without in-house counsel. We’d have pay our attorney to read, interpret, and advise us on each one so we know what we’re signing. 99 times of 100 that’s not a justifiable cost.
Our Master Services Agreement Covers it Anyway
Our Master Services Agreement has robust language surrounding the issues of IP Assignment, non-disclosure, etc., so having multiple agreements which address the same issues is difficult for either side to enforce legally, should that become necessary.
We’ve made a decision to use our Simple NDA for the courtship phase, and let our MSA govern these issues once we actually decide to work together.
It’s Also About Focus
We don’t want to spend out time talking to attorneys. It’s nauseating and costs too much (sorry, Marc). Keeping the NDA process clean and simple allows us to spend more time doing what we’re good at, and what we love.
Next time you get an NDA request, see if you can simplify the process. You’ll be glad you did.