Don’t Sign That NDA Until You Read This

Siging a DocumentBack in November, Facebook surprised a Silicon Valley iOS Meetup when it requested that attendees sign non-disclosure agreements before they were allowed into its building to hear a presentation on Facebook for iOS. Later, some erstwhile attendees said on the Meetup website that they’d refused and gone home.

Although this seemed like a somewhat unusual situation, we all know that NDAs aren’t uncommon in the tech world, whether you’re at developer conferences, trade shows, some meetups, and … even applying for a job. “It’s becoming more and more common to see the use of NDAs,” says Robert Milligan, an intellectual property, labor and employment attorney in the Los Angeles office of law firm Seyfarth Shaw.

Indeed. Here’s a look at Facebook’s NDA that it sprung on attendees at the iOS meetup. You may not be able to read it, but you can see it’s pretty dense.

Facebook-NDA-Docment

Here’s what Christine Abernathy, who heads up Facebook’s iOS SDK effort and served as a speaker at the meetup, had to say in a post on the Meetup site:

Facebook NDA

Words of Warning

Milligan offered some cautionary points for you to consider when faced with a request to sign an NDA, whether it’s when attending an event or applying for a job.

First, consider the document’s scope. If the NDA is focused on a specific idea or presentation, you should expect it to be enforced. If it’s too broad, the company may have a hard time pursuing any action. However, any NDA imposes a chilling effect that’s meant to deter people from pilfering the company’s intellectual property.

Also, look out for overly broad terms like “relating to” or “referring to” any information or materials that are going to be shared with you. An NDA should only relate to information that you don’t already know or wasn’t publicly available. “If they’re putting a general prohibition on something that you already know, then you’re just putting handcuffs on yourself if you sign it,” Milligan says.

Negotiation Tips for the Surprise NDA

If you’re asked to sign an NDA on the spot, you can ask to modify the document. Companies are more like to accept changes to such last-minute NDAs, especially in situations involving the hiring of a highly coveted job candidate. Some companies do supply an advance copy, giving prospective signers a chance to have it vetted through their company attorney, an intellectual property attorney or a labor law attorney.

Here’s some language that Milligan suggests people add to an NDA if it’s not already included:

Nothing prevents the [NDA signer] from using his/her own generalized skill, knowledge or expertise that he/she already knew, or was publicly available.

“This puts the onus on the employer to prove what you already knew,” Milligan explains.

Prospective Employers and You

If a prospective employer hands you an NDA that includes a “liquidated damages provision,” put your pen down immediately. This means that in the event of a breach, the company is entitled to amount of damages specified in the NDA without having to show what the actual damage was.

“I would think hard about going to a job interview or attending an event where I had to sign an NDA with this provision,” Milligan says. “I work with companies in the tech industry, and about 25 percent of them use these provisions, particularly if there is a high-level position involved or it’s a sophisticated company.”

At the same time, reasonable NDAs are actually a good thing to sign when you’re interviewing. A smartly written one will protect you, your current employer and the prospective employer. A narrowly written NDA would state that a prospective employee is not to share confidential or competitive information about their current employer’s projects.

“A prospective employer wants to know about your skills, not so much about current or past employer’s projects that would provide a competitive advantage,” Milligan says. “The prospective employer may want to expose you to some of their information to see if you are a good fit, and at that point it’s OK for them to present an NDA.”

NDAs at Events

At trade shows like CES, vendors issue NDAs like copiers gone crazy. Given the legal wrangling that’s erupted in the toy industry over trade shows, it’s understandable. Ask Mattel, which is facing a $172 million judgement for sending spies to toy fairs to get a jump on upcoming products from its arch-rival MGA.

“If engineers don’t think there’s anything to be worried about, there’s the Mattel case. This applies especially to the gaming industry, where new games go to market and are discussed at trade shows [like E3],” Milligan says. “If you’re working on a game and going to some event in the same industry where you have to sign an NDA, I would think long and hard about the scope of the NDA and where you have overlap.”

Comments

  1. BY Tanya says:

    Hello Dawn, thank you for an informative article.

    I have been asked to sign an NDA before coming in for an initial in-person interview. As a small startup, I wasn’t surprised that they asked for Non-Disclosure but am concerned about a statement they included regarding Non-Competition:

    “Until the later of (a) two (2) years after the date of this Agreement, or (b) one (1) year after the date XYZ Company and Other Party are no longer in a business relationship related to the Confidential Information disclosed pursuant to this Agreement, Other Party shall not in any capacity, advise, manage, render or perform services to or for any person or entity if such advice, management, performance or services provided are competitive to XYZ Company within any geographical location wherein XYZ Company or any of its subsidiaries produces, sells or markets its products during such period.”

    Being that I’m just interviewing for the position I worry that signing the NDA will restrict my opportunities if the job is not offered or I do not accept the position. Is this a valid concern and if so, what would you recommend before proceeding with signing and/or interview?

    Thank you very much for your feedback.

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