Confidential Information

When do you need an NDA?

2 min read

Generally speaking, I’m not a fan of signing a confidentiality agreement (CA) or Non-Disclosure Agreement (NDA) over an idea. Ideas alone aren’t worth anything, so in my opinion, they don’t need protecting.

In the development of tangible products and processes, however, there are times when a confidentiality agreement is appropriate. When are those instances, who do they involve, and when should you be requesting and/or receiving an NDA?

*The information in this post represents my opinion only and should not be taken as legal advice. Please take care to consult a legal professional in these matters. See end of post for references.

Confidential information

Anything that is not in the public domain (you can’t google or easily derive without special permission) can be considered confidential.

You can protect info that has to do with product, financials, marketing plans or ownership to people like co-packers, consultants, marketers, food scientists, process engineers… basically any service professional with whom you would need to share info with in order to do business. Engage them in an NDA just prior to when the agreed upon services will commence. The signing party should be an authorized signer (executive, director or manager) for the entire organization they represent, so that you are free to discuss your issue with anyone in their org.

Your template

It’s better for you to provide your agreement to the other party (make it a mutual agreement to cover both parties) but if the other party is a larger organization than you, they will typically want you to sign their NDA. This is often non-negotiable. Nevertheless, you should still have it reviewed by your attorney before signing. Pay attention to how they define what is deemed confidential – you want a broad definition, not one that places the burden on you to mark everything as “confidential” that you want protected. Secondly, should a dispute arise, check the venue where proceedings must take place. If they are not in your town you might want to add verbiage that the associated costs and expenses be recoverable by the prevailing party.

Note: If you give someone unsolicited information, even if you mark it as confidential, it is not enforceable without a signed agreement. Keep this in mind when you are looking to raise funds and sending your deck around to investors and other interested parties.

Investors

Prospective investors don’t sign NDAs. Don’t embarrass yourself by asking an investor to sign your NDA in order to pitch to them. They see so many deals, it would be an administrative nightmare if they did. They will sign once they are in serious and deep discussions with you. If you are worried about sharing your information with investors read here and here (pg 60).

Important: get a CPG focused attorney for all legal help. Here are my recommendations:

Cliff DeGroot, Davis Wright Tremaine LLP

Nick Giannuzzi, Giannuzzi Lewendon LLP

Chuck Cotter, Holland & Hart LLP

All my best,

Jennifer

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