What is a Non-Disclosure Agreement?
A non-disclosure agreement is a legal contract between two or more parties that outlines confidential material—for example, proprietary information or trade secrets—and creates a confidential relationship between the parties. In this contract, the person or company promises not to disclose the confidential information to others without proper authorization.
When Do You Need a Non-Disclosure Agreement?
If you have a new product idea or are in the process of designing a new product, you need to take all precautions. A non-disclosure agreement (NDA) protects you by keeping your idea a secret. You would typically have it signed by companies you visit and expose your idea to, like a product development company or any person or entity that may be giving you a quote on prototyping, patents, materials, or even marketing. If you have a lawyer, they will probably draft an NDA catered specifically to your needs but this can be costly.
What Type of Non-Disclosure Agreement Should You Use?
There are several types of NDAs. If you are an inventor, designer, or a creative mind who just came up with a great idea and you want to protect it from the businesses you are approaching for consultation or quotes, there are two types of NDAs you may need. There is the one-way NDA, which we at Spark refer to as the “Second Party Confidential Non-Disclosure Agreement,” and the two-way NDA or “Reciprocal Confidential Non-Disclosure Agreement”:
• The Second Party Confidential Non-Disclosure Agreement is used when you alone, the creative inventor of the idea, are sharing the invention with a company and that company agrees to keep it undisclosed or secret.
• The Reciprocal Confidential Non-Disclosure Agreement, also known as a Mutual NDA, is used when both you and the company are sharing confidential information with each other. This agreement ensures both parties keep that information a secret. It also allows inventors and businesses to be more open and comfortable with each other in a first meeting. If you are approaching a company that is an expert in the service you need, you may want to sign this NDA since that company will also share with you important information that may help you during the product development process.
If you need a copy of either of these NDAs, you can download them from our website for free. Regardless of the type of non-disclosure agreement you choose to sign, for your peace of mind, make sure that the companies you choose to work with have no issues in signing the agreement.