NDA's - Any Harm in Signing Lots of Them?

November 25, 2006 12:22 PM

Are there any downsides (any potential harm or risks) to signing confidentiality agreements (NDA's)?

I've been getting a few of these requests from people to work together and they want me to sign an NDA before discussing. Can I just sign these things willy-nilly or is there any risk to signing a lot of them?

posted by anonymous to Law & Government (10 answers total)

The only thing I can think of (and IANAL of course) is if you're doing anything creative in a similar field, and they just happen to have a similar idea to one you've already been kicking around. They now have physical evidence (the NDA) that you've seen their work, and that could be fun in accusations of plagiarism later if they think that you've stolen their idea. See here (third item down) for where that can lead.
posted by Paragon at 12:47 PM on November 25, 2006

IANAL. You could amend the documents presented (for example, deleting a three-year noncompete clause on a one month contract/NDA), photocopy them, and return them with edits and signature.
posted by Señor Pantalones at 12:51 PM on November 25, 2006

I ain't a lawyer neither.
NDAs are not inherently evil. It allows everybody on the project to know they're mutually held to a level of confidentiality and trust. Noncompetes are different beasts, also not inherently evil. If you're working on a per-project or contract basis, see if you can get wording that releases you from the NDA/noncompete after the product is shipped/ goes to market/ is cancelled/ is superseded/ etc.

How the contract is worded is what makes it evil or not. Read it thoroughly and if you take issue with a clause, try to negotiate it.
posted by ardgedee at 1:08 PM on November 25, 2006

You should get in the habit of reading NDAs, because they can be rather one sided (and not in your favor). You may be able to amend the NDAs you are offered.
posted by Good Brain at 1:34 PM on November 25, 2006

I realize this may not be an option for you, but it would be a good idea to consult with an attorney about these NDAs, especially if you're being presented with multiple such agreements from different parties and your business depends on managing the risks intelligently.

Either way, signing NDAs "willy-nilly" is probably not something you want to do. NDAs aren't inherently bad or anything, they facilitate business getting done, but the devil is in the details.

Before you sign any NDA, you really really want to understand all it says. Agreements are presented as "NDAs" all the time which have more than just non-disclosure elements. For instance, the text of agreements entitled something like "Non-Disclosure Agreement" commonly include stuff like assignment of inventions, non-compete, and non-solicit covenants. Those provisions cover a lot more ground than simple NDA and will change any cost/benefit analysis you perform when thinking about whether to sign. You absolutely need to be aware of what the fine print of any agreement purporting only to be an NDA says; just because someone calls it an NDA and it only says "Non-Disclosure Agreement" at the top doesn't make it benign, reasonable, or only about non-disclosure.

Aside from other elements which may be included and aren't really non-disclosure, the terms of the non-disclosure pieces are critical to understand as well (e.g. if your relationship with party X, in whose favor you signed an NDA, expires, when do the non-disclosure covenants expire; can you disclose based on a court order without violating the NDA; can you disclose information which is already publicly available without violating the NDA; etc...).

If I were you, I would not sign NDAs "willy-nilly" and if I were in what appears to be your position, I would seriously consider talking to an attorney in your jurisdiction who is familiar with such agreements. The considerations I'm discussing are just some examples of things it's important to be aware of when thinking about NDAs and is absolutely not comprehensive or real legal advice for your situation -- I only mean to point out a subset of ways in which an NDA-type agreement, and especially multiple ones in play at the same time, can lead to real risks and real harm if you don't pay careful attention to your situation.

Obviously, if you sign an NDA which contains a non-compete and then you go and talk to another group of people, even if it's not clear that they are in direct competition, you might find yourself in a bad situation. The same applies if you sign an NDA that has an invention assignment clause which you don't thoroughly understand before you sign. The same applies in many other ways.

In fact, because NDAs are written to maximally protect the group presenting you the NDA, and they're often written with the assumption that people presented with them won't read them carefully, you should be familiar with the meaning and risks inherent in every section of the NDA, because the people who wrote made sure to ensure their benefit and to place real risks and potential harms on you.

Which is not to say any particular NDA is necessarily bad or unreasonable or dangerous for you, it's just to say that it's incumbent on you to make sure you understand any agreement and you're ok with what it really says, because any NDA will involve actual risk/potential harm for you if you breach it or if you might have breached it and have to pay legal fees to show you didn't. People make good decisions to sign NDAs every day, but the point of the NDA is to put limitations, risks, and potential harm on you in certain circumstances.

So, the answer is "yes" there are real risks and potential harms in any NDA. I don't know what they are in your particular circumstances. I've tried to give an explanation of some examples of potential risks above, but the above is a) massively incomplete and b) generalized information not at all tailored for you or meant to be so.

In sum, it would be a good idea to know what the risks and potential harms are for your particular circumstances because they surely do exist.
posted by psmith at 1:39 PM on November 25, 2006 [2 favorites]

You should also consider whether the NDA would limit your right to blow the whistle on your employers/partners in the event that you discover fraud or criminal behavior.
posted by univac at 2:35 PM on November 25, 2006

In the past, I have seen numerous uses of a delaying strategy regarding NDAs. Request the NDA for review and then consistently forget to bring it to meetings etc. Unless the NDA presenters include their attorney in the meeting-schedule loop their need to involve you may outweigh their need to file the NDA. Should you subsequently determine that greater involvement in the project is in your best interests, you can always find the document.
posted by mwhybark at 2:48 PM on November 25, 2006

Are there any downsides

Obviously, yes! But, qualifying and quantifying those risks, good luck :P

Here is a very interesting article that deals with non-disclosure, non-compete, and non-solicitation agreements which emphasizes the issues faced by new-grads, where there is a distinct power imbalance: To sign or not to sign.

it would be a good idea to consult with an attorney about these NDAs

From the article I linked:

Ms. Scali [Elisa Scali, an Ottawa-based associate for Gowling Lafleur Henderson LLP] points out that there is a strange legal wrinkle whereby restrictive agreements are more likely to be enforced if the employee who signs them has had legal advice, since it is then reasonable to suppose that they knew what they were getting into.

So, should you just go ahead and sign the agreement anyway, assuming that it will not be enforceable? "I don't think a lawyer would advise that, " says Mr. Shamie [Toronto lawyer Stephen Shamie, a Queen's University Business School professor], "But certainly that may be a view that is out there."

It seems as though you may be entering these NDAs with peers, which is an interesting difference. On the other hand the entities you are dealing with did have the resources and interest to bother having the agreement drafted..

mwhybark's idea seems reasonable. I wonder what other strategies might be effective..
posted by Chuckles at 5:33 PM on November 25, 2006

Not sure if this would work in your position (probably not), but since you do a lot of stuff under NDA, perhaps you could use that as a reason to provide them with a signed copy of your "standard boilerplate" NDA - a generic NDA you've had drawn up, to be used in all normal situations, so there is no devil in the details.

Failing that, as others have said - read them first. If there is iffy stuff in it, negotiate, or tell them that policy is to sign standard NDAs for the purpose of NDA and only NDA. Fluff, bells and whistles, need to be redacted.
"It's Policy" :)

I've never had one come back to bite me, but I think the wrong NDA in the wrong hands over the wrong project could bite.
posted by -harlequin- at 8:51 PM on November 25, 2006

Wow. Harlequin basically said what I was thinking. I've gotten in the habit of neogtiating and rewriting leases (I move a lot). It makes sense to have your own NDA that is very narrow in its language. But the simple act of attempting to use your own document could force the party presenting such a document to change their tune (or just get open about what exactly they want in the agreement).
posted by Goofyy at 4:50 AM on November 27, 2006