How effective are NDAs? | Hacker News Reader

How effective are NDAs?

2 pointsApane1014 comments

I've been asked to sign an NDA by a company who'd like to use my development services. They already gave me a run down of their entire company strategy post NDA. I'm curious how effective are NDAs anyway? I'm aware that they are only effective if the party chooses to pursue a case, but my intuition tells me that they're more of a preventative smoke screen than a viable document.

Thoughts?

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Depends on how powerful each party is.

As an individual or small company, the NDAs you give to others are totally meaningless. You generally don't have the desire/funds to pursue people who violate the contract, and it's often difficult to prove anything.

Large/smart companies will also realize that they have all the power, and they'll include upper limits to the damages they have to pay. One of my companies was recently, egregiously ripped off by one of the 3 largest insurance companies in the world, and they had capped their liability at $100k. Fortunately, there was easy-to-prove malice, so they will end up having to pay us some day.

If you're the one signing the NDA and the other party is large and powerful, you actually could be successfully sued.

So in short: NDAs are powerful when you have the resources to back them up with lawsuits. As a developer, I've signed NDAs and non-competes for many small-to-medium businesses, and I've never been tempted to violate them, so I can't attest to the validity of that situation.

Fair enough, in my particular case it's complicated for example - before I even began speaking with this client, I already began coding an application in a particular niche space... it so happens that this client is also in the same space. However, my application is totally different, I just hope that there isn't an issue there because technically, I'm not stealing anything proprietary, and my app is obviously different. I just wonder, how that works.

It's very likely that they could pursue you legally for releasing your app in the same space after working on theirs. They might be ultimately destined to lose, but they'd pursue you based on the fact that you don't have the resources to fight them.

So by signing this NDA, you are very likely (in effect) saying that you won't release your app or discuss it. It depends on the exact wording, though.

If your app is important to you, you need do one or more of the following:

1. Ask the company directly about the release of your app and get it in writing that your app is not their property and that you can release it without violating agreements with them.

2. Talk to a lawyer

(I'm not a lawyer and am not giving you legal advice)

Understood, however a couple points:

1. He's based in a totally different country, I'm in Canada and he might as well be based in Japan (an example but close enough).

2. The chances of him discovering the app are slim.

3. The chances of him finding out the I created the app are even slimmer, and because the app isn't a direct competitor the chances of him looking up who founded the company isn't likely.

I think based on those 3 points, my odds are good. But I truly appreciate the dialog here because it got me thinking.

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