I'm a tech entrepreneur who recently met with another tech entrepreneur who is in the same industry. He wants to potentially work with me but before he can talk about his venture he wants me to sign a non-disclosure agreement.

I agree with the answers above of making sure that the NDA covers both sides well. Too many times have I had NDAs come across my desk that only cover the IP of one of the parties. It's not a huge thing (although definitely needs to be addressed), but I personally find it leaves a bad taste in my mouth about the company (specifically that they only have their own interests in mind).

Secondly, this goes without saying, but actually read the NDA. Some people / companies try to through some really nasty stuff in there. A few weeks ago I had an NDA poked under my nose which, other than being horribly one sided, had the following clause (paraphrased):
- The Recipient acknowledges that remedies at law may be inadequate to protect [The Company] against any actual or *threatened* breach of this Agreement by the Recipient [...]
- [...] the Recipient agrees that [The Company] may seek injunctive or other equitable relief in [The Company’s] favor, *without proof of actual damages*.

Maybe this is common, but it's the first time I'd seen a clause in an NDA like this.

It also depends on the terms of the NDA, but there is typically a clause stating that any IP developed prior and independently will naturally remain that of the party which developed it. The only caveat being that you need to be able to:
a) Prove that the IP truly was developed independently prior to signing the NDA
b) Be able to support your position (from a financial perspective) in the worst case scenario of you being accused of violating the agreement (which for a start up with limited cash can be pretty catastrophic).

I realise it isn't a 'yes sign the NDA' or 'no don't ever sign an NDA' answer, but I hope that gives a bit of useful information and points to look out for.

Also as a side note, what would be the potential upside of working with another entrepreneur? I'd start with a bit of due diligence on him/her before pursuing the NDA further (might turn out that they are horrible to work with, or not...).

Answered 8 years ago

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