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When to Use a Non-Disclosure Agreement (NDA) for Your Startup

If your business is in need of legal documents more nuanced to your needs than an NDA, it might be time to consult a professional Business Attorney in NYC. The Mouratova Law Firm savvy businesses with many of their legal needs. Learn more about our business law services at http://www.mouratovalawfirm.com/ or contact us at (212) 203-2406 for more information.<br>

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When to Use a Non-Disclosure Agreement (NDA) for Your Startup

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  1. When to Use a Non-Disclosure Agreement (NDA) for Your Startup?

  2. Introduction • Non-disclosure agreements (NDAs) are certainly overused and often used incorrectly. But to say that no business professional should ever use an NDA is going too far. There are limited circumstances where an NDA makes sense. • We are providing you with a short explanation of when an NDA makes sense for a business and how a professional Business Attorney In NYC can help you in various ways.

  3. When an NDA Matters • An NDA matters only when a company has very specific trade secrets or confidential information it wants to keep secret. This is more than just your business “idea.” (“It’s like Uber for Stamp Collectors!”). Think Coca-Cola’s secret formula. Or a highly technical process that is being developed but has not yet been patented (patents are publicly available and not protected by an NDA—they’re protected by patent law). • The thing about confidential information and trade secrets, though, is that they must be treated like trade secrets and confidential information to maintain that status. If you want to keep your trade secrets a secret, then it is best to label all iterations, drawings, recordings, and other materials related to your trade secrets as “Trade Secret – Private and Confidential.”

  4. When an NDA Does Not Matter • If your business idea is something you’re discussing at parties, you have announced on Facebook, or on your business’s website, it’s not confidential anymore. And therefore it’s not a secret. And therefore it cannot be covered by an NDA. • Many NDAs have language that is overbroad that tries to protect every piece of information that business partners will ever discuss with each other. These types of NDAs fall into the “worthless” category. • NDAs only protect information that is not otherwise public. And so there is a tension between promoting your business and protecting your trade secrets. But know that if you go public with your “confidential” information in any forum or venue, you forever lose the argument that you kept your trade secrets a secret. And if that’s the case for your business, then you can go ahead and skip the NDA.

  5. What an NDA Is Not • The worst misuse of the NDA by novice startup founders is by those who think that it serves as some sort of startup legal document catch-all. It is most certainly not that. It is for the very limited purposes described above. • It does not take the place of an intellectual property assignment agreement, which assures that a company owns its IP. It does not take the place of an operating agreement, which governs the internal workings of an LLC. It does not take the place of restricted stock purchase agreements, which should be how startups allocate stock among founders. It does not take the place of employment or contractor agreements, which dictate terms of employment and payment for personnel.

  6. Contact Us If your business is in need of legal documents more nuanced to your needs than an NDA, it might be time to consult a professional Business Attorney in NYC. The Mouratova Law Firm savvy businesses with many of their legal needs. Learn more about our business law services at http://www.mouratovalawfirm.com/ or contact us at (212) 203-2406 for more information.

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