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Should Developers Sign An NDA Before Hearing Your Idea?

Feb 6 2014, 9:43am CST | by

Should Developers Sign An NDA Before Hearing Your Idea?
 
 

The Non-Disclosure Agreement (NDA) is an extremely common form of “protecting” entrepreneurs’ ideas from being stolen. Each day on matchist, people looking for developers ask me how they can ensure their idea is protected. They ask me whether developers will sign an NDA.

For the most part, these folks need to face a cold, hard truth- an idea in its purest form is not worth anything in the business world. It’s the execution that matters. Unless entrepreneurs have some intellectual property to protect or code already written, an NDA is usually a sign of amateurism. Why? Here are a few reasons to consider:

1) Can you explain your idea at a high level?- Without disclosing your secret sauce, can you talk to developers in order to understand how much time and effort your idea will take to build? Most of the time, the answer is yes- until you start developing the actual technology, their is not much inherent value in the idea itself. Once you agree to start working with a developer, it’s completely fine to have them sign an NDA. Better yet, make sure the contract you execute has solid terms to protect your code and ensure ownership. Attorneys who work with entrepreneurs and startups will have good experience knowing which clauses to put in.

2) Are you starting the relationship off right?- An NDA is an inherent sign of mistrust. It’s certainly a form of protection, but in an informal environment when you are just starting to seek out technical help, having a developer sign an NDA before even talking to them indicates you don’t trust them. The best professional freelance developers often take this to heart, and many will not work with entrepreneurs who require an NDA up front because it’s a signaling mechanism to them that the entrepreneur isn’t sophisticated and not worth his/her time.

3) Can the developer really sign an NDA?- Professional freelance developers obviously spend most time coding, but a lot of time is spent finding new clients. They are speaking with entrepreneurs all day long, and if they have to sign an NDA before speaking to each one, it is highly likely they will infringe on someone’s NDA because ideas are very often repeated. This is especially true in times of fads. Take for example, a developer who has built a few daily deal sites (imagine this is a few years ago when daily deals were all the rage). If the developer could not speak to other potential clients who had ideas for daily deal sites, he/she would be out of projects very quickly. It’s simply not a practical business step.

4) Can you enforce the NDA?- Let’s say someone does run off with your idea after you have them sign an NDA. What do you do? Well get ready for some fun times and lots of money ahead. To actually enforce the NDA, you’d have to hire a lawyer, acquire evidence, determine what legal claim you can make, and consider criminal prosecution. Now, I’m not a lawyer, but that sounds like a lot of money, time and wasted resources. So if you can’t (or won’t) enforce an NDA, what’s the point of having developers sign it in the first place?

I want to emphasize, that NDAs are absolutely appropriate when there are trade secrets and other intellectual property at stake. Talk to your attorney about the appropriate time and place to use NDAs. The situation I am exploring is the entrepreneur who is too afraid of his/her idea being stolen that they have multiple developers sign NDAs before even talking to them about their idea and the cost to build it.

Entrepreneurs- remember, ideas aren’t worth much…it’s all about the execution. And you can’t execute if you don’t have a product.

Source: Forbes

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