Frequently we’re asked to sign Non-Disclosure Agreements (NDA). Either they’re presented at an exploratory stage or when agreements or licenses are to be written. Generally we say no to them, and here’s why.
First a little bit of background: Cubeia is a technology company. We work as expert consultants with some of the larger companies in the iGaming business. We also are amendable to revenue share deals which makes us interesting for entrepreneurs. So on the one hand we have established relationships with existing companies and on the other hand start-ups.
Many NDA’s are simply badly written. Others contain possible death traps for a company like ours. But mostly, these are our problems:
- Too early: We find ourselves in a position much like an investor or a company with an established RD department. If you want to explore an idea with us that’s fine, but don’t expect us to sign an NDA at an exploratory stage, if we did we’d soon have drawers full of them.
- Non-mutual: If you tell me your secret I’ll tell you mine. There’s usually no good reason for an NDA not to be mutual unless it is explicitly meant as a possible weapon. And if that’s your kind of game, don’t expect us to play along.
- No expiration: If the NDA doesn’t expire we’d soon be drowning in NDA’s. Each new agreement would just pile on the stack of existing ones, and the accumulated legal risk would increase each time we sign a new one. Also it often makes little sense: do you really have an idea so powerful that it needs to be kept under wraps forever?
Here’s an interesting detail: Cubeia often insists on Swedish jurisdiction for our agreements, and if I’ve understood it correctly, for any piece of information to be confidential according to Swedish law it not only needs to identified as such, it must also be business critical and the holder of the information must be able to show that they’ve taken steps to actually keep it secret. So not just any piece of data will do, and if you want to press claims based on the disclosure of information you also must make sure that you yourself has kept it secret. Which makes sense to me, and also renders many of the NDA’s I’ve seen fairly useless.
So where does this leave us? Obviously Cubeia will sign an NDA if needed. But you need to convince us that it is worth the time and the risk. By making it mutual, keeping it simple and supplying an expiration date the chances we’ll find it acceptable increases significantly. Also understand that we will not sign any NDA based on ideas only, or while we’re still only exploring possibilities of a deal.
In software development it is recognized that new code, however well written, will always increase complexity and risk. The same goes for legal documents, no matter how well written, the simple fact that there is one more of them increases complexity, which equals increased cost of maintenance and increased risk.