What is a non-disclosure agreement?

A subject that regularly comes up in mobile app development is the non-disclosure agreement or “NDA.” Simply put, a non-disclosure agreement is a contract to keep a secret. A non-disclosure agreement is often used when two companies want to meet to discuss a joint opportunity involving the exchange of confidential information.  In the context of someone wanting to hire a mobile app developer, an NDA would be an agreement between the person with the mobile app idea and the programmers who could bring that idea to life.  The idea person would disclose the idea to the programmer to negotiate a contract for programming of the mobile app; the programmer would agree to keep the idea confidential.

Non-disclosure agreements are generally not particularly complex, and most such agreements contain several basic components or parts. At the beginning of the general non-disclosure agreement is a preamble or paragraph identifying the parties. The next section of a typical non-disclosure agreement includes definitions of terms that are used in the agreement. Such terms might include the words “proprietary information,” “trade secrets,” and “protected technology.” Any other terms that might be either ambiguous or key terms of the agreement are often also defined in this terms section.

The next section found in the typical non-disclosure agreement is the exclusions section. The exclusions section generally contains five or six different “carve-outs” to secrets or confidential information that is not covered by the non-disclosure agreement.  We’ll discuss NDA carve-outs in a later post.

The typical NDA includes a term that each party shall use the same reasonable efforts to protect the confidential information as are used to protect its own proprietary information. Related to this is often a requirement that the disclosure of the confidential information shall be restricted to those individuals in the company who are directly participating in the review of the information and have a need to know such information.

Another term in the agreement might clarify that execution of the agreement does not give a license or other transfer of proprietary rights to the technology, but only is construed to be a sharing of information.

Most non-disclosure agreements have a period of time of effectiveness of the information. This time period or term of the agreement is one, two, three, or some finite number of years. The reason for this is that as time goes on, it becomes increasingly difficult to protect confidential information, as memories of the agreement and changes in personnel often result in accidental dissemination of the confidential information. It is also understood that confidential information typically has a relatively short period of viability. Over time, the value of trade secrets and other technical information diminishes as others independently develop or are able to reverse-engineer products to learn of the trade secrets. Trade secrets naturally disseminate as employees move from company to company, understanding, of course, that there are some trade secrets that can last many years, such as the formula for Coca-Cola©, but generally most confidential agreements expire after some period of time. Non-disclosure agreements are typically signed by both parties and may include an exhibit attached to the end of the NDA, describing in broad terms the specific confidential information that is being exchanged.

An NDA may not be required in all circumstances.  Here’s a link to a post by Mark Stetler of AppMuse on factors to consider when deciding if you need an NDA.  If you have questions about NDAs, including whether you need an NDA, consult an attorney experienced in intellectual property law.

Disclaimer: The information and materials provided for this AppMuse.com post have been prepared by Carr & Ferrell LLP for informational purposes only. You should not rely on this post to make decisions critical to your business, as it may be incomplete or inapplicable for your particular circumstances. This general information does not constitute legal advice, and is not intended to replace the counsel of a qualified attorney.

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Carr & Ferrell LLP is a full-service law firm uniquely positioned to provide strategic patent and intellectual property, corporate, financing and litigation services. Located in the heart of Silicon Valley’s technology and venture capital community, our attorneys leverage their technical, business and legal expertise to help emerging companies and investors transform business concepts into industry leading enterprises. For more information, visit www.carrferrell.com.

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  1. [...] a previous post, we discussed general terms found in a non-disclosure agreement, or “NDA.”  One section found in the typical non-disclosure agreement is the exclusions [...]

  2. [...] last two guest posts on the AppMusing blog defined non-disclosure agreements and described what types of information are often excluded by NDAs.  This post concerns another [...]

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