The first step in starting a successful enterprise is developing an idea, business concept, process, prototype or invention that sets you apart from other businesses. After you have your idea, the next step is to engage with other people who can help you bring it to life.
Unfortunately, it’s almost impossible to enter meaningful discussions with potential business partners, manufacturers, suppliers, advisers and clients without disclosing a significant amount of confidential information about your idea. By doing this you expose yourself to the risk that the other party will simply turn away and attempt to exploit the idea themselves. The risks are particularly high when the other party you are talking to has significantly more resources than you do.
So how do you disclose enough information to get other people excited and involved in your new idea, but without risking everything before you have even got started? The answer is a well drafted Mutual Non-Disclosure Agreement (a Mutual NDA).
A Mutual NDA protects both parties, i.e. you and the party you are negotiating with. In other words, any confidential information disclosed by either party is protected under the Mutual NDA. A Mutual NDA required both parties to respect the other party’s confidential information. The ‘mutual’ nature of the NDA makes it more likely that other people will agree to enter one before you start talking – because both parties are protected.
Certain categories of information are generally not protected by a Mutual NDA. This includes information the other party already knows about, such as public information, and things the other party had already developed themselves, independently of you. This prevents either party from claiming rights over things the other party could already have exploited.
Mutual NDAs also allow for confidential information to be disclosed to advisors (such as financiers and accountants) for the purpose of obtaining advice. This is on the condition that the advisors agree to keep the information confidential and not use if for their other clients.
If you would like to discuss how to protect your ideas before speaking to other people, call us now on 1300 654 590.
While you’re at it – ready our other article on How do I protect my ‘ideas’? | Andreyev Lawyers