To NDA Or Not To NDA

- Ryan Kuder

The other day, we had a potential client ask us to sign an NDA.  We declined.  And naturally, we didn’t get the business.  The experience led us to an internal discussion about NDAs which in turn led to a discussion on Twitter about NDAs and there was no consensus.  The question posed was, “If a potential client wants you to sign an NDA before telling you about their job, would you sign it?”

Here is our reasoning for saying “no thanks.”

We work on lots of projects for lots of clients.  Along the way, we learn things about their business models, their software, and their ideas.  We also have a bunch of ideas of our own that we’re working on, some public (see the Purple People Collective), some not.  Through our interactions with our clients and our own internal projects, we gain experience that benefits our future clients.  And each of our current clients benefits from the experience we’ve gained from others.

Imagine this hypothetical scenario.  Pretend we’re working on a project for a client who is revolutionizing the way that pet food is sold on the internet.  Now imagine a new potential client comes and asks us to sign an NDA.  We sign it.  They then proceed to tell us about this revolutionary new way they’re going to sell pet food over the internet.  Turns out, some of their ideas are the same ones that our current client has.  Where did the ideas come from?  Did we steal anything?  Did we violate the NDA?  It gets murky.

Big Cos usually have policies on unsolicited ideas.  They don’t accept them.  The reasoning is that they’re working on lots of stuff that nobody knows about.  Maybe even your idea.  If you send Apple an idea for a new computer that has a giant wheel instead of a keyboard, they could very well be working on something similar already.  Or planning to work on it.  Or having discussions about it.  Or brainstorming it.  Why open themselves up to future lawsuits over the idea?

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Posted via email from Jay’s posterous


One Response to “To NDA Or Not To NDA”

  1. carterharkins says:

    Actually, Adobe has a Terms of Use that explicitly states that any unsolicited ideas you share with them become their property, without any implied compensation. Many other software companies do this. Heck, we did it with one of our web ventures, since we were seeking a patent on our technology.

    As far as NDAs, not into them. I won’t sign them, and I won’t ask others to either. I have pitched to countless VCs, and never once asked any of them to sign an NDA. It would have quashed even the opportunity to pitch. At some level, you have to trust that people will believe in you as well as your idea. One VC told me that stealing people’s ideas is more expensive than funding them.

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