Mutual Non Disclosure Agreements AKA NDA
A mutual non – disclosure binds both parties to confidentiality.
Definition of Confidential Information
The information that is bound to confidentiality is all information that the parties exchange. It is important to take note of the specific definition of what “information” includes, as written in your NDA.
Intellectual Property Ownership
A great concern for any company is to maintain full control and possession of its intellectual property. It’s important to specify whether or not the disclosure of confidential information would disturb the ownership of intellectual property. It’s preferable for any start up to include a provision that explicitly states that confidential information remains the Disclosing party’s property.
The governing law section is not one to skip over. By signing the non – disclosure agreement, you consent to be sued in the state specified in the clause, if a legal dispute shall arise.
Before you disclose your startup corporation’s confidential information you should be aware that you need to resources to enforce your agreement. This means you will need a legal ‘war chest’ to pursue any violators. Even with an NDA you should be very careful who you share your confidential information with. As a general rule you can show someone WHAT your product does, without showing HOW it works. The HOW is what you want to protect.
NDA’s and Investors
Typically Angel or Venture Capital (VC) investor will not sign an NDA. Investors are pitched startups all day long; they fear that if they sign an NDA from each startup they will be exposing themselves to significant legal risk. Since investor will not sign NDA’s you should be careful to protect your HOW, and focus on WHAT your startups does. If they investor wants more information you may want to add them to your Board of Advisors
. Advisor will typically sign an NDA Intellectual Property agreement.
If you would like to setup a free consultation with an experienced San Francisco business law attorney, please reach out to us at Sutter Law Firm.