An NDA Guide for Chicago's Tech and Startup Scene
If you are part of Chicago’s thriving start-up scene, your most valuable asset is your intellectual property (IP). Your plan to protect your IP, usually starts with a nondisclosure agreement (NDA). These types of confidentiality agreements ensure that if you are talking with prospective clients or vendors and you are sharing information about your business, you will retain ownership of any information or intellectual property you disclose. In short, it let’s everyone have a sneak peak while minimizing the risk.
So what do you want your nondisclosure agreement to do? Generally, you want the NDA to do a few main things:
Define what information will be considered confidential and what information will not be
Ensure that the disclosing party retains ownership of its confidential information
Define steps a party must take to protect the confidential information, when and if disclosures are permitted
Define the length of time the confidential will remain protected and ensure that a party can request the return or destruction of its confidential information
Next, the last and most important question is how much should you trust it? Meaning, is it now okay to disclose everything? Should you retain some ‘secret sauce’ so to speak.
Generally, my advice would be to disclose the minimum amount of information necessary to move forward with the client or vendor.
If you are a software company, it might look like running a demonstration of the software (but not a trial license - you should make them sign an actual license agreement for that).
If you are a services company, it might include some demonstration of your services, including key metrics or client results.
If you are a manufacturing a product, you might include product specifications or samples for testing.
NDAs are probably the most common agreement and having negotiated thousands of them in my career as a Chicago tech lawyer, they stand up in court. There are nuances and rules of interpretation that can get tricky, but generally, you can trust that the concept is a very well understood type of legal agreement. So if you have any concerns about how much faith to put into them, please feel free to reach out a lawyer experienced working with start-ups.
