What is NDA in App Development? What Should be Included in NDA Agreement?
When a company cooperates with a supplier, its employees, investors, freelancers, and companies, NDA is needed because of confidential information that is often exchanged or disclosed. This exchange can take place when the two parties agree. However, the company needs to maintain information and confidentiality on the part of the contract partner. Non-disclosure agreements (NDA) are required to ensure the confidentiality of information.
What is an NDA?
An NDA agreement is a legal contract used when confidential information is shared between a company and another company, supplier, investors, employees, etc. It guarantees that a person or organization that has access to information won’t disclose it.
The NDA must specify the essential terms:
- determination of the confidential information;
- determination of the rights and obligations of the sides to ensure the protection of the trade secret regime;
- determination of the period of NDA.
Non-disclosure agreement includes confidentiality and protection. NDA can include various information - from ideas to technology of development. The subject of a non-disclosure agreement can be the model of business, testing results, and product reviews.
The NDA for app development creates a framework for the protection of ideas and information from being passed on to third parties or stolen. Violation of an agreement has many legal consequences, including penalties and lawsuits. Non-disclosure agreements protect your business, so even accidents are covered.
The Main Tasks of an NDA
There are three main tasks of an NDA:
Protected Information Definition: When you decide what information is confidential and what can be shared, the Non-disclosure agreement categorizes information. It allows the sides to cooperate within the boundaries set by the agreement;
Protecting Confidential Information: You will create a legal obligation to keep a secret by signing an NDA. Any leak of confidential information is a violation of the contract;
Patent protection: Public disclosure of a pending invention or information ceases can invalidate patent rights, and an NDA can protect the inventor during the creation of a concept or product.
What is Confidential Information?
Confidential information is information about an individual or legal documentation that is classified and available for review among a narrow circle of people who meet certain criteria. Access to such data is also initially limited by law. They may only be distributed with the consent of the person concerned.
Confidential information is considered to be any data, knowing which, it is possible to identify a participant in public or commercial procurement. These include such information:
- passport details;
- residential address;
- details of relatives;
- information about the place of employment;
- income data, etc.
Commercial secrets, namely:
- information of a different nature, except information that is prohibited from being classified.
Pros and Cons of App Development NDA
The reason to sign an NDA for app development is to keep information transmitted confidentially.
App Development NDA Signing Advantages:
- Fixes agreements regarding the disposal of information. The text of the Non-disclosure agreement defines valuable commercial information and defines the rules for its transfer, disclosure, and return to the transferring party or removal at the end of the cooperation.
- Provides a legal basis for filing a lawsuit. Enforceability problems with NDA and recovery of harm can only be discussed if there is an agreement. By not entering into an NDA for mobile app development, you deprive yourself of the legal basis for going to court and protecting your interests.
- Provides comfortable cooperation The presence of an NDA has a disciplining effect on the sides. The NDA defines the information that should be dealt with “gently”. Signing an NDA provides the disclosing side with the confidence to handle their secret information more responsibly.
App Development NDA Cons
-Determine what the confidential information is and how likely it is to do the job without disclosing it. Some tasks require the involvement of a third person. Solving your questions should be based on the data you provide. If you include this data in the list not to be distributed, you all come to a dead end. You have to consider what is the subject of secret information for you, how it can move in the project, and who can use it.
- Changing information to confidential after the work started and of course, the transfer of all data is a bad decision. You won’t be able to show anything to another party in this situation.
When Should You Sign an NDA?
When you are looking for investors, collaborators, and new employees, secrete information must be shared outside your organization. Non-disclosure agreements ensure that the company’s workflow will be safe.
When should you conclude an NDA? Below you can find 5 situations in which an NDA is required.
Products: If your organization agrees to sell or license a technology or product, you should make sure that data you disclose - financial, technical, or other — can’t be transferred to others;
Employees: Your employees have access to secret information, you need to ensure that they can’t share your company's sensitive data while at the work or after leaving;
Partners: When you communicate with a new partner or investor, you have to ensure that information is protected during negotiations;
New Clients: When you bring in a new client, your company can become the owner of that company's NDA. The Non-disclosure agreement will protect your company by determining what information is confidential to avoid incidental legal liability;
Mergers and Acquisitions: If you are selling your business, secret financial and operational information is shared with the company that buys your business and with intermediaries. The NDA ensures that your data will be protected.
Non-disclosure agreements are often applied when providing information to potential investors, entering into contracts with suppliers, and exploring venture opportunities.
How to Protect Your App Idea?
It's best to use all available preventive methods and learn how to avoid your app idea to be stolen. You have to decide what will be protected: a concept, an algorithm, a technology, or the end product. You need to analyze what phase of development you are in:
1. There is an idea;
2. The product is under development, there is a prototype;
3. There is an end product.
Another factor that you must manage is who has access to the project. In case you just have an idea and you are seeking partners, you can agree with the participants on non-disclosure unless, of course, you trust them. Verbal agreements are a way to protect the idea of an application in the early stages.
A good option for keeping the idea secret is the NDA to develop the software. An NDA for mobile app development guarantees security for your data. NDA is a legal document that contains all the conditions for data exchange, who is responsible for its security and to what extent, how information can be used, and other obligations.
An NDA is a good option, but you must understand that it doesn’t fully give protection to an idea. You should limit the circle of persons who have access to information. So it will not be hard to prevent information leakage. To do this, use an NDA when selecting software development contractors, and it can be the most effective approach to protecting your intellectual property.
What to Include in NDA to Protect Confidential Information?
Every NDA should include the following essential elements:
1. Identification of the participants: This section identifies people and/or organizations participating in an NDA. It explains who the disclosing side and the recipient are, while using names and addresses. Relevant individuals such as lawyers, or partners can be listed;
2. Definitions: In this section, you will find the various information covered by what the agreement protects. It determines the confidential information;
3. Obligations: When secret information is leaked, the NDA sets out the behavior for both parties, and defines the consequences of non-compliance with the agreement;
4. Scope: A defined scope ensures that Non-disclosure agreements can be enforced. The use of general terms such as "service information" isn’t specific enough. The scope should define what information is covered;
5. Timeframe: NDAs have their timeframe, and most agreements define the number of years that confidential information must be secret. Even those agreements that have an indefinite duration often specify when information ceases to be under the protection of the agreement;
6. Return of Information: if the business relationship between the parties is terminated, the NDA may require the recipient to confirm that information was destroyed or returned;
7. Exceptions: It includes public info, disclosed details, or information that was known before or financial relationship with the company;
8. Remedies: When an agreement is violated, there are many possible actions or remedies. It includes compensation for harm, other actions related to breaking the agreement, and violation of trademarks. copyrights, or patents.
If you have an NDA template for app development, it should be concise and understandable. You can download an NDA non-disclosure agreement template and use it in development: just make a copy of the document and replace the data
When to Refrain From a Non-Disclosure Agreement?
An NDA has many advantages in app development when compared to other types of agreements. However, this may not be enough, or sometimes it may have some negative consequences, for instance, when applying an NDA isn’t possible. For example:
An NDA at this stage may be more of a disadvantage than an advantage. It's important to keep a balance here. Of course, there is a risk if you share an app idea with potential sponsors. But stakeholders will not invest in a project if you refuse to provide details before signing the NDA.
Here you can discuss the overall concept of the product, the scope, and the technology that will be used during development. You can share the rest of the information after signing the contract.
Stage of Hiring a Development Team
At this point, you will run into the same privacy flaws. Potential contractors should be informed about the task and scope of the work to be done, at least in general terms. But you can keep the basic concept secret until you sign the agreement. Discuss possible problems and bottlenecks that you may encounter during the development process without discussing specific details. It is advisable to sign the Non-Disclosure Agreement at the same time as the Development Agreement.
How to Secure Your App Idea From Being Stolen?
1. Tell about your idea only to a limited circle of people
The simplest, and at the same time, the most effective way to protect any information is to share it with care. Of course, to create a product, you will have to share information with developers and other professionals, but remember to exercise restraint and disclose as little information as possible to people you are not sure about. This advice may seem too obvious and even primitive, but often in the wake of enthusiasm and excitement, people blurt out their ideas to anyone ready to listen to them.
2. Sign a non-disclosure agreement
This is the most legally effective way to keep your idea private. Such an agreement must be concluded with the developer company even before the details of your order are disclosed. Of course, you should also be prepared for the fact that there may be unscrupulous employees in the team who do not comply with the terms of the agreements — no method is a guarantee of keeping your information secret — but, at least, in this case, you will be protected by law.
3. Share information selectively
Application development consists of many sub-processes that different teams can perform, and in total up to several dozen people can take part in the process. It is not necessary to tell absolutely every performer every detail of your idea. Dedicate each developer only to those details that are necessary specifically for his work.
4. Copyright your product
An application is considered the intellectual property of its creator, so elements of the code and user interface can be copyrighted. Copyrighting is relatively cheaper than most alternatives and provides basic protection against direct copying (no modifications to the original).
5. Apply for a patent
This is a more serious form of intellectual property protection that protects the functionality of your mobile application. Obtaining patent rights can be quite a lengthy process, including a process of careful examination since a patent is granted only if the functionality of your application is recognized as innovative and extraordinary. If you are confident in these qualities of your product, you should apply for a patent as early as possible.
Companies want to feel secure when they cooperate. Therefore, they conclude an NDA (non-disclosure agreement) — an agreement on non-disclosure of proprietary information. It protects the one who shares his secret and helps the parties trust each other. After all, when there is a document that you can refer to in case of an emergency, sharing something important is no longer scary.
An NDA is signed as soon as the client begins to tell the developers about his or her business specifics. This usually happens when the client has already compiled a short list of companies with which it would be interesting to cooperate, but before signing the main contract.
If you have an idea for developing a mobile application, feel free to email or call us to get a free consultation. We will gladly listen to all your wishes, offer the best ways to implement your idea and help in the development of a mobile application.
About the Author
Vitalii is a Project Manager with extensive knowledge and experience in fields that matter for a project success. He has a proven track record in coordinating a number of large-scale projects from idea to deployment. Currently, his is working with the Stfalcon team.