When running a business it’s critical to understand what assets you have and how to protect those assets. An asset is anything of economic value owned or controlled by a person/organization. Whether you‘re a new business or an establish business developing a new concept, it’s vital to recognize that your idea is an asset that requires safeguarding.
An all too common step in bringing an idea to market is finding people outside of your business to aide in the maturation of that product/service. This includes, among others, people who will directly develop the idea, people who will initially serve as a test market, potential investors, and people who will serve as suppliers or distributors. How do you guarantee that you don’t give away your brainchild and unintentionally birth another competitor into the market? You utilize a non-disclosure agreement (NDA).
A non-disclosure agreement (often referred to as a confidentiality agreement) swears both parties to secrecy regarding certain shared information. However rather than a mere pinky promise, it gives legal bite to anyone who decides to break their vow of silence.
In practicing law, I’ve learned that many people are aware that they should have an NDA, but many are unaware of its fundamentals. So here’s an abridged NDA synopsis:
An NDA is a legally binding document that protects a company’s proprietary information. Proprietary information is nonpublic business information that has commercial value to its owner(s).
In an NDA it’s important to identify the type of information that will be shared, what information is confidential, and the permitted use of that information.
An NDA can identify any set number of years that the information must be held in confidence. However, information that becomes generally known to the public loses all protection, unless it becomes generally known as a result of someone breaking the agreement.
A person signing an NDA can share that information only when necessary (i.e. to employees or fellow colleagues working on the project). Information under the NDA may also be required to be disclosed as a part of a legal proceeding or governmental inquiry – in this instance the NDA should mandate that any such request be immediately relayed to the content’s creator.
An NDA should stipulate that all information shared, and developed, belongs to the “sharing party” and must be returned at the end of the business relationship.
In short, a proper NDA grants you excellent idea security when sharing your idea(s). Always remember the above-mentioned points – the consequences of breaking the NDA will be generally included but ultimately determined by law. Certain contracts, an NDA being one of them, should be reviewed by a qualified attorney and tailored to fit your exact need.
Now that you’re idea is safeguarded with an NDA, remember that success isn’t just about the idea; it’s about the execution.
Jamal Jackson, JD/MBA is a corporate attorney licensed in the State of Illinois. He is the CEO & Managing Attorney of Jackson Corporate Law Offices (www.JacksonCounsel.com), Co-Founder of Initiative Consulting Group, LLC (www.InitiativeCG.com) and a Public/Motivational Speaker engaging audiences in the topic areas of Business, Leadership, and Legacy (www.JamalEJackson.com).