Non-disclosure agreements, or N.D.A.’s, are intended to protect proprietary information, including ideas and technology, from being stolen by employees, prospective employees, consultants, prospective investors, etc. But if a server in a yogurt shop is asked to sign an N.D.A., has the trend gone too far? (No, she did not sign, and still is working.) A New York Times article notes that while some companies pitching ideas to investors continue to ask for N.D.A.’s, investors most often refuse to sign them. Entrepreneurs nevertheless continue to pitch their ideas since, as the article suggests, the risk of delaying the funding process by obtaining legal assistance is more significant than the risk of being copied. Also, from a practical perspective, enforcement of an N.D.A. is difficult since it can be costly for a small start up to litigate, and often boils down to a “he said/she said” scenario. Noting a decline in N.D.A.s from a decade ago, the article offers some helpful guidelines. Ultimately however, companies requesting N.D.A.’s, or those being asked to sign them, might find that consulting a lawyer with knowledge of non-disclosure agreements is the best practice, and can help evaluate whether an N.D.A. is appropriate in a specific case.
