Why NDAs Matter for Tech

In technology, your code, algorithms, and product roadmap are your competitive advantage. NDAs protect these assets when sharing confidential information with investors, partners, or potential acquirers.

Key Elements of a Strong NDA

1. Clear Definition of Confidential Information

Vague definitions weaken enforceability. Specify what's confidential: source code, business plans, customer lists, pricing, etc. Also define exceptions (public knowledge, independently developed, etc.).

2. Appropriate Scope and Duration

How long should the confidentiality obligation last? For trade secrets, perpetual protection is ideal. For general business information, 3-5 years is standard.

Tech tip: For source code and algorithms, consider "perpetual" protection since their value doesn't diminish with time.

3. Permitted Use

Specify what the recipient can do with the information. Example: "Permitted Use means evaluation for potential business relationship only."

4. Return or Destruction of Information

Include a clause requiring return or destruction of confidential materials after the relationship ends. This is often overlooked but critical.

5. Standard Legal Protections

Include provisions for:

No license granted (sharing ≠ permission to use)
No obligation to disclose
No warranty (you're not guaranteeing accuracy)
Remedies for breach (injunctive relief + damages)

One-Way vs. Mutual NDAs

One-way: You (the discloser) are protecting your information from the recipient. Use when sharing with service providers or investors.

Mutual: Both parties share confidential information and agree to protect each other. Use with partners or co-development partners.

Common Mistakes to Avoid

Over-broad definitions: Leads to disputes about what's actually confidential.
Unreasonable obligations: 10-year confidentiality for general business info isn't standard.
No survival clause: Confidentiality should survive termination of the business relationship.
Missing disclosure carve-outs: Allow disclosure to attorneys and accountants "as required by law."

Enforcement Considerations

An NDA is only valuable if you can enforce it. In case of breach:

Document the breach immediately
Send a cease-and-desist letter
Preserve evidence for litigation
Consider injunctive relief (court order to stop)

Best practice: Include a choice of law clause specifying which state's law governs the NDA. Tech-friendly jurisdictions like California and Delaware are common.

Final Thoughts

A well-drafted NDA is a critical asset protection tool for tech companies. Don't use templates alone—have legal counsel review NDAs, especially for high-value disclosures. The cost of a strong NDA is minimal compared to the cost of losing IP protection.

NDA Best Practices for Tech Companies