A non-disclosure agreement (NDA), also known as a confidentiality agreement, confidential disclosure agreement (CDA), proprietary information agreement (PIA), or secrecy agreement, is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects non-public business information. -Wikipedia
I’ve probably signed 100 of these things since I’ve been a software developer. For the most part, I don’t have a problem signing them … so long as there is actually an equitable exchange that occurs between myself and the entity requesting that I sign one. 90% of the time, this is not the case. Frequently I’m asked to sign these agreements before anyone has even agreed to hire me for my services, before they will even begin a conversation with me about what they would like me to do for them. At the point when I sign one, I have always felt that I’m giving them something… my freedom to be able to talk creatively with anyone else about whatever this entity values about the conversation that is about to take place, which is usually very subjective… and when I’m being asked on the front end to sign one I really have no idea what the actual value is going to be if anything. I have no way of really measuring my risk of signing an NDA until after the NDA is signed and the conversation is done.
Signing an NDA for a conversation with a startup is even worse because they are usually convinced that all of what they are doing is 100% original. No offense folks, but original ideas are extremely rare… and a startup really does not have ‘trade secrets’ yet. 
Besides, as a startup … you need all the help and exposure you can get… be smart about sharing within your immediate network, but the benefit from help from folks you do trust far outweighs the legal benefit of protecting your ‘original’ idea from folks that you don’t. Bottom line is… if you don’t trust the person you’re talking to enough not to steal your idea, don’t share it with them at all… NDA or not.
I totally understand why companies would want to protect their interests. I just wonder if the nature of the NDA actually serves to hinder trust and creativity rather than to enhance it.
Unfortunately, the NDA has become one of those tools in the toolbox of managers and executives … and is pretty much a common way of doing business, so they are unavoidable in many circumstances if you want to do business with who-ever is requesting that you sign one.
Here are some things that I always look out for when a request to sign an NDA has been presented to me:
- What is the term?
Make sure that there is a defined term (6 mos, 1 year) for how long you are being held to the NDA. Seriously consider the value of signing an agreement that holds you to being indefinitely gagged. - How open / vague is the agreement?
Is it specific to an industry? Does it specifically name the product that you’re going to discuss? - What am I really required to keep secret?
Are there specific things named in the agreement that you are required to hush about? - Are there exceptions?
Are you allowed to discuss the contents of your conversation with your partners or contractors?
In my experience, these things are such a pain that combined with the fact that you generally don’t know what you’re really risking until after you’ve signed one … It’s almost not worth it to even go through the effort of having an attorney review them and then have to manage all of the ones that you’ve signed to make sure that you’re in compliance with them. That said, if you think that there is going to be an equitable relationship, and the client is really adamant about having an NDA, I would recommend having an attorney look at the agreement.