I’ve come across two types of NDA-loving individual in my career: the clueless and the very clueless. The first type of clueless are simply inexperienced; they’re naive and have yet to actually use an NDA. The second type of clueless are the old-school, the hyper-paranoid and the truly witless; the type of person that “just doesn’t get it”. This post is for both of you guys.
NDAs are unusable
Reading through the slew of NDAs I’ve been sent—some of which I begrudgingly signed—I notice a pattern emerge: they’re literally unusable. Most NDAs are boilerplate templates that just don’t consider the requirements of the modern business world; the last NDA I was asked to sign included the following requirement:
[to] not use, reproduce, transform or store any of the Confidential Information in an externally accessible computer or electronic information retrieval system or transmit it in any form or by any means whatsoever outside of Recipients usual address(es) or place(s) of business
My solicitor confirmed that upon signing this NDA, I would be unable to send an e-mail, even to the disclosing party, about the project!
NDAs don’t work
There’s no better way to put this, so I’ll just say it: I’ve never not technically broken an NDA. Whether with a loved one or a colleague, I’ve always spoken about the projects I’m working on. And I’ve never met anyone different. I’ve had open conversations with a few of the world’s most successful new entrepreneurs, soon-to-be-multi-millionaires, under non-disclosure agreements with the largest corporations on the planet: they all say what they want to, whether or not they’re under an NDA.
Business pre-nuptial agreements
I can’t think of a worse way to try start a healthy, trusting business relationship than to say “sign this document and I’ll fuck you up if you ever talk it”. It’s just not cool and it turns me right off.
If you trust me, you’ll trust me not to “steal” your idea. If you don’t trust me, goodbye.
NDAs say ideas are valuable
There’s a popular myth that NDAs help promote that says ideas are worth the paper they’re written on. The truth is, ideas are worth jack-shit without implementation. Whatever your idea, however smart it is, at least ten people have already had it. What makes you special is that you’re doing something about it now. Tim Bray on community-based sites, via Daring Fireball:
If you and I have the same good idea for a community-based Web site on the same day, and mine is on the air in five months and yours in eight, then you’re dead. And it doesn’t matter if yours is better, because the community has gathered.
Closed ideas are dead ideas
Ideas aren’t real until they’re talked about, considered, discussed and picked apart. Put your ideas out into the world and watch them blossom; keep them locked-up in your mind and see them perish.
A smart, young entrepreneur I met at an OpenCoffee event wanted to share an idea with me to see if I could help; but not without an NDA first. I refused to sign and he missed out on some quality, free advice.
Paul Arden wrote about this in his wonderfully short (but not short titled) It’s Not How Good You Are, It’s How Good You Want to Be:
Give away everything you know, and more will come back to you.
You will remember from school other students preventing you from seeing their answers by placing their arm around their exercise book or exam paper. It is the same at work, people are secretive with ideas. ‘Don’t tell them that, they’ll take the credit for it.’ The problem with hoarding is you end up living off your reserves. Eventually you become stale. If you give away everything you have, you are left with nothing. This forces you to look, to be aware, to replenish. Somehow the more you give away the more comes back to you.Ideas are open knowledge. Don’t claim ownership. They’re not your ideas anyway, they’re someone else’s. They are out there floating on the ether. You just have to put yourself in a frame of mind to pick them up.
Never again
I’d like to go on the record to say that neither myself nor Contrast will ever sign an NDA again.
26 Comments
we want pre-nup!
Posted by kanye at 10:43 am on 22 April, 2008.
Great article.
There is plenty of advice being given, particularly to technical people, that they need to protect their IP. The pressure is coming from all over, especially from government agencies, and people are responding by using boilerplate forms because they don’t have the legal knowledge to understand and they won’t/can’t spend money getting it.
Posted by UberAlex at 10:44 am on 22 April, 2008.
Amen.
Posted by David RIce at 10:59 am on 22 April, 2008.
Hi Eoghan,
Interesting post that I’d like to speak to you more about, although more on the business attitudes side of things than on the actual worth of NDA’s.
As with all legal documents there is a time and a place for them. As you rightly pointed out trust is a major issue. In a number of circumstances a company may enter a consortium with a direct competitor within their market to develop a bespoke application for a client. In such a case there are obvious concerns around protection of intellectual property, business practices and confidential information. In such cases NDA’s are par for the course as a method of appropriate protection. I would stress that there are compelling legal reasons for seeking to protect your company’s confidential information.
Company directors could find themselves personally liable to creditors or shareholders for reckless trading in the event that they did not take care of a company’s confidential or proprietary information which subsequently leads to the company failing.
So on the one hand I do agree with you that NDA’s can stifle growth in some cases, there remain compelling reasons and particular situations where they should be used as a matter of good governance and due diligence and as such they really should not be taken off the table entirely.
All the best,
Chris
Posted by Chris at 11:04 am on 22 April, 2008.
I would agree. Ideas are everywhere and people that try to keep them secret are only fooling themselves. Everyone has plenty of things going on in there lives already and generally won’t have time to implement it. Its about the implementation. NDA’s in the whole start up scene are a complete waste of paper. I’m sure there are more valid uses in the corporate world.
Posted by Derek Organ at 11:18 am on 22 April, 2008.
Agree with the knee-jerk usage. But I don’t know that you can write off thousands of years of business secrecy so easily.
I’m pretty sure that the impact of either the Wii or the the iPhone would have been far less astonishing had their numerous hardware partners been blathering on about the cool stuff they were working on. Or Intel on the proprietary work they did for the MacBookAir, for example. I suspect not even their “loved ones” knew.
On top of that, NDAs don’t just protect wonderful ideas. They protect hard, mean actions.
Business is a pretty incestuous place, and if one company is in the midst of trying to buy another (for example), it probably doesn’t want that company going off to tell its competitors.
Bottom line: it’s a luxury to only work with companies you trust
Posted by James at 11:20 am on 22 April, 2008.
Specfically on the notion that ideas are worth something, I enjoyed this piece by Derek Sivers. Undoubtedly simplistic, but the idea holds true.
Posted by Des at 2:44 pm on 22 April, 2008.
It always amazes me how often I meet people who are reluctant to discuss their idea for fear that it will be stolen. If your idea is any good I’m pretty sure that loads of other people all over the world have already thought of it, and some of them are probably working on it. Ideas are easy, it’s the execution of them that’s difficult.
“Everyone who has ever taken a shower has had an idea. It’s the person who gets out of the shower, dries off, and does something about it that makes a difference.”
– Nolan Bushnell
Posted by Aidan Finn at 3:13 pm on 22 April, 2008.
Nail on head regarding the value of ideas. I’ve a friend who’s currently setting up a website for a new business idea, whom I’ve encouraged to come along to OpenCoffee and TechLudd to network and learn from interesting people. Unfortunately his reaction to the suggestions borders on the paranoid - he thinks it would be easy for them to ’steal’ his idea. No amount of reassurance from me could convince him that he’s being utterly and totally ridiculous. That’s despite the fact that I’m on the board of a Boston based startup solely because I openly blogged about an idea which was of no value whatsoever while it was only in my head. [still shaking my head].
Posted by James Corbett at 3:46 pm on 22 April, 2008.
Great!!!
Posted by Niyaz PK at 7:37 am on 23 April, 2008.
Hah!
I gound that funny.
I’ve been thru so many NDA’s over here its crazy; especially amongst early startups where they really are just ideas and nothing more.
However things do seem 2b improving
lal
Posted by brendan lally at 6:22 am on 17 May, 2008.
It is a trust thing; whilst we’re still happy to sign NDAs (mostly for clients abroad - particularly the US) - it does not, as you say, make for a great start to a business partnership. One of our more recent clients had the right idea: they didn’t want an NDA, pointing out that they’re trusting us to execute their idea, and that trust is part of a long-term business partnership, as it should be for a designer/creative agency and a client.
Interesting article: thanks!
- Richard
Posted by Richard, Peacock Car at 7:32 pm on 8 June, 2008.
One of the reasons that a good, thoughtful, well-crafted, plain English NDA can be a positive thing is that it lays out expectations. People, though generally well intentioned, do not always have the sense God gave them.
I have certainly declined to sign the stupid NDAs that bar you from taking business in the same industry for two years, for example, but I have happily signed many others. And when under an NDA from a client, in turn I require my sub-contractors to sign similar NDAs or I’m in breech of my agreed obligation. There isn’t really a way around that.
I’m curious: do you also do business without a contract?
Posted by Sabrina at 12:45 am on 30 June, 2008.
I agree and enjoyed your analogy of NDAs as “business pre-nuptial agreements.” The internet industry and the open source community is special because it leads the world in valuing and utilizing transparency, sharing, and feedback for the greater gain of everyone.
Posted by Dan Croak at 6:31 am on 23 July, 2008.
I couldn’t agree more with this post. I recently had a potential partner walk out of a our lunch meeting 2 minutes after sitting down because I wouldn’t sign his four page NDA that his lawyer father wrote.
Posted by Tom at 2:46 am on 22 August, 2008.
Umm, that’s not quite right. They have their place. Quite often © will do, though, or patent pending. Sworn to secrecy, the official secrets act, it all makes some sense. Life is pretty ruthless at times.
Yeah, contracts are crap, limiting, and paranoid. Were people nicer I would live without them. Money too (a contract of sorts).
Irony of contracts is that if you stick to them you don’t need them.
Posted by da bishop at 1:49 pm on 12 September, 2008.
had Xerox Parc employees signed an NDA, they would not have been allowed to take the swag over to Steve at apple.
Posted by da bishop at 1:50 pm on 12 September, 2008.
Oh yeah, ideas without application: that’s why patents expire. However, the idea is incredibly valuable. Just like my deceptively simple looking designs, a surprising amount of effort and expertise came into getting that needle from the haystack.
Posted by da bishop at 1:51 pm on 12 September, 2008.
Здравствуйте!
Необходимо сделать сайт. Форумы, чаты и тому подобное не нужно. Хочу получить качественную вёрстку, именно качественную, а то в дримвивере и сама могу. Дизайн готов, а остальное за вами.
Очень хотелось бы услышать пару дельных советов о том, какой код выбрать, где лучше регить домен и так далее…
бюджет = около 150 - 200 долл.
Posted by www.contrast.ie at 4:33 pm on 29 October, 2008.
Спасибо Яндексу, именно благодаря ему я нашла этот замечательный форум.
Думаю здесь я останусь надолго.
Posted by Swigmawab at 5:28 pm on 21 March, 2009.
Мегареспект !!!!!
Posted by DymnEmbelobem at 8:41 am on 1 August, 2009.
Awesome post. And completely true. I’ve signed NDAs that do nothing but try to scare developers and create a false sense of worth. And most developers do talk, NDA or not, to each other. Without feedback progress is limited.
Posted by Timothy at 10:22 pm on 9 December, 2009.
Simplistic argument, IMHO. But appears to have been effective link/comment bait
Posted by chrisco at 9:42 am on 10 December, 2009.
The NDA is used to protect trade secret information, this is information that is otherwise unprotect able (ie patent).
It does not protect against the ten other people that have had your idea, only people you disclose the information to.
You can affectively get trade secret protection simply by disclosing that the information to be conveyed is a trade secret. This is known as an implied-contract “If the defendant has notice that the information which is to be disclosed is to be kept in confidence and agrees to receive the information or, in the alternative, does not object prior to receipt, may be considered to have implicitly agreed to abide by the duty of confidentiality.” kettle
NDA’s are completely usable, and enforceable. Read the case law, or the news. http://www.pcpro.co.uk/news/208812/facebook-settles-legal-dispute-over-site-idea
The value in these “hyper-paranoid and the truly witless” is the same as the value of a patent. Offering people that use them protection, so they are encouraged to offer the ideas to others. This is not so much about protecting what you call “unvaluable” ideas as it is about protecting the work that has gone into the idea, the highly expensive research and development.
This small amount of protection (patents, and trade secret laws) allows a richer public domain, one where people MORE freely share information, because they are slightly less scared of a Zuckerberg that might steal their idea.
I say, if an NDA is what you need to be more free and open with your ideas, then so be it. Otherwise, people will, for the most part, be too scared to ever disclose their information to anyone. This is the same motive behind the patent system, which has served us well.
The truth is that the language in most non-disclosure agreements is scary, it is limiting and it conveys responsibility upon the recipient of the information. And it’s true, most of it is bullshit, there is very little information that you can’t convey to others under an NDA. But the NDA not only is protection against you using the information to compete with the company, but also, any competitors that would seek that information through you. For instance, a company B hires you because they know you worked for company A, company A has a new technology that helps them gain market share over B. You disclose that technology to B, and they use it, they are liable for trade secret infringement.
NDA’s are meant to ensure fair game play, free from fear of “state of nature” business tactics. This way we all behave humanely, with a more free public domain.
Posted by bmf at 3:04 pm on 10 December, 2009.
Irish Eyes - you indeed show your metal as a pure techie with no clue about business or the law. Indeed NDAs are boring boilerplates and rarely tailored to individual circumstances. However, without an instruyment such as this - you and your cohorts would be ripping off code and ideas ad nauseum. In case you haven’t noticed in the US or in the Hague - ideas are indeed worth as much or more than the finished product in the court of law - though I would agree that no one should own an idea UNLESS they are able to take it to fruition.
Posted by Bob Rocklin at 3:56 pm on 26 December, 2009.
Уважаемые читатели. С Рождеством христовым хочется вас поздравить. Админу сайта отдельное пожелание-побольше читателей на блоге, креативных интересных статей и всего всего всего
Posted by bapattiniColi at 12:42 pm on 9 January, 2010.
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