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9 Dec 2013

Protecting Your Ideas via Non-Disclosure Agreements

Last Friday, I discussed the four types of intellectual property protection with a promise that I would discuss non-disclosure agreements (NDAs) very soon. Well, that day has come (and you only had to wait a weekend). Like last Friday’s post, don’t expect this post to be the most entertaining post you are going to read today. Discussing NDAs isn’t as sexy as discussing methods for getting that next great idea for your indie game, but it is an important topic nonetheless.

This is a discussion about ideas and how to protect them. You don’t want someone leaking company secrets and ideas, right? Then it’s time to put the law on your side. Here’s what you need to know about NDAs and how to protect your ideas and in turn, your livelihood.



But first, what is an NDA?

Remember when one of your friends would tell you a secret on the playground during grade school?

“Hey, I have a secret but you can’t tell anybody.”

Sound familiar? If you agreed to not tell your buddies’ secret, in a way, you verbally signed an NDA. An NDA is merely the promise to another party that you will keep their secret just that: a secret. You agree not to share confidential information as stated within an NDA, and the other party has the confidence to know that you will keep their secrets ‘secret.’ Both parties also know that if an NDA is broken, there could be legal ramifications as well, so NDAs are serious business.

There are also usually two types of NDAs: mutual and unilateral. A mutual NDA states that both parties have secret information they would like to share with one another and states the info must not be shared with anyone else. Alternatively, a unilateral NDA states only one party is sharing secret information with an outsider, and as you have probably guessed, the secret information cannot be shared with anyone else.

Which one should you use? If possible, use a mutual NDA. Because both parties are exchanging confidential information, a mutual NDA gives both parties leverage in the agreement. If one party breaks the NDA, the other party could share the sensitive information in retaliation. Think of it as the “you share my secret, I’ll share yours,” of NDAs.



Detailing what is protected

I don’t have to tell you this is the most important part of an NDA. When writing which information needs to be protected, you need to cover your bases appropriately. What do I mean? Quite simply, you need to write the information that will be protected as broadly as possible . Write every small detail that must be protected, no matter how miniscule it may sound. In addition, ensure that you include a lot of ‘catch-all’ terms. Have you ever heard the term, “including but not limited to?” Here is an example:

“Party A agrees to not share the following information with an outside party, including but not limited to game release, game synopsis, platform release, etc.”

This phrase basically covers any unexpected leaks in the court of law.

Also, be sure to include another ‘catch-all’ term such as “any and all information related to (your game’s name).” Again, this protects any leaks that you didn’t think of during the writing of your NDA. In short, anything leaked can be punishable in the court of law, which is the entire point of writing your NDA in the first place.



Use the ‘injunctive relief’ clause

You will also want to include a clause known as ‘injunctive relief’ into your NDA. Injunctive relief allows a court to order a party to stop leaking confidential information that is protected in your NDA. Without an injunctive relief clause, there is nothing to stop the party in question from continuing to leak the sensitive information. Thus, an injunctive relief clause states the accused party must stop releasing confidential information forever, or there could be further legal ramifications. Think of it as a safety net to include with your NDA.

You especially need to use an injunctive relief clause if you are conducting business internationally. For example, if a foreign company is sharing your company’s information, by taking your agreement that includes an injunctive relief clause, a foreign court is much more likely to order the other party to stop sharing sensitive information without your permission. Traditionally, it is much harder for a foreign court to help you to stop the leaking of your sensitive information without an injunctive relief clause, so it is in your best interest to include one.

Using injunctive relief properly depends on your situation, so speak to a lawyer to determine the best way to use an injunctive relief clause in your NDA.


NDAs are not perfect

While they can provide a layer of legal protection you would not otherwise have, NDAs cannot protect you completely. They are certainly effective here in America if both parties are U.S. companies/citizens, but whenever NDAs are signed between two foreign parties? NDAs lose much of their power. For example, if you provide some ideas for a game to someone overseas and they sign an NDA stating they will not share the information and develop a game using the ideas you shared, the U.S. court can do little to stop the game from being produced and sold (but if both parties are American? You can sue the pants off of them).Thus, you need to sue the individual in their court of law, yet even so, the NDA may not hold up in that court of law.

NDAs are not perfect, but they are useful in warning other parties that the information you are sharing is completely confidential. Moreover, it also warns other parties that if confidential information is shared, they could be risking a lawsuit. Nobody wants that, so in most cases, an NDA will work for you.

Of course, if you have any questions about NDAs, you should consult a trusted lawyer. I’ll turn this post over to you guys. Do you have any experience with using NDAs to protect your company’s secrets? Share your story in the comments below!

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