How to Protect your Ideas with a Non-Disclosure Agreement (NDA)

Kristina.Jay
November 26, 2015

As the old saying goes, ideas are as free as the wind, but that doesn’t mean that once you’ve got a brilliant one you’ll just have to go about making it happen without any means of guarding it in the meantime. Just like copyrighting can protect the expression of an idea and patents are meant for useful inventions, there are legal resorts to protect ideas before they are brought to fruition. The very fact that a great idea usually requires more than one person in order for it to become a reality means that agreements will have to be made in advance so as to protect that idea from being stolen or misused.

Known in the industry as a non-disclosure agreement, or NDA for short, this type of contract stipulates the exact terms that a person must obey when coming into contact with a certain company secret. Virtually every project can benefit from requiring that all contributors sign a NDA, since it allows the person who originated the idea to retain ownership of it and reap the rewards of his or her own creativity. Imagine, if you will, that a large auto company is on the verge of launching a revolutionary new vehicle. The people who are working to see this project through must have ready access to the information they need in order to build the car. But now imagine if they simply took all that sensitive information and placed it right at the doorstep of a competing firm due to being offered a higher salary. Obviously the first auto company would have a lot to loose, both in terms of strategic advantage and financial gains. These kinds of things are surprisingly common throughout history.

That’s where the NDA comes in. A well-crafted NDA can offer you protection from these kinds of circumstances and ensure that your idea will always remain in safe hands. Haing a legal contract allows you to ask for damages if your employee or collaborator divulges any sensitive information during the disclosure period. At the very least, a good NDA contract should contain the following: the names of the parties involved, a clear and precise definition of what exactly is subject to confidentiality and the timeframe during which the agreement is applicable. It should also mention any exceptions that can be discussed publicly, either because they’re already available or because they’re of little strategic importance. Another crucial aspect lies in stating the terms under which the aforementioned NDA can be broken, usually in cases of force majeure or ones that involve the implication of law enforcement agencies.

Non-disclosure agreements are vital for keeping valuable information protected in the modern age. A testament to the importance of such secrets can be witnessed in the case of KFC’s original recipe of 11 herbs and spices. Since this recipe is essential to the originality of the products sold by the company, KFC decided that it had to be kept literally under lock. At present time, Colonel Sanders’ handwritten note with every ingredient listed is housed in a massive digital safe that weighs more than 770 pounds and is under 24-hour surveillance. Of course, not every company can encase their secrets in a vault, which makes it all the more important to guard your essential information through subtler, but no less effective means.

There are many scenarios in which having a NDA ready and at your disposal can be a big advantage. The best part is that, once you have a professional NDA drafted, you can use it for all future purposes just by changing a few key details in the document. As an indirect benefit, you may be surprised to learn that this kind of practice is standard in most industries. Far from being frowned upon, asking someone to sign a NDA is actually seen as a sign that the project they’re going to be involved in is serious and worthwhile.

All in all, the basic idea behind a NDA is that it offers protection, and by doing so, it encourages the open exchange of information and data as it pertains to the project at hand. If you don’t have to worry about anyone stealing it, you can very well use your idea to inspire your employees and get them to perform at higher levels, or to convince investors that your company is worth putting obscene amounts of money in. Just about anything is possible, as long as you protect your business with a NDA right from the start.