14 min read
NDA for App Development: Everything You Need to Know About Non-Disclosure Agreements for App Development
Once a business starts sharing its confidential information with someone outside the company, most often a non-disclosure agreement (NDA) goes into motion. This legal contract acts as a guarantor that one party won’t publish or secretly use the intellectual property of another, as well as regulates other important aspects in some cases.
Mobile app development companies are using NDAs quite often. Actually, an NDA must be the very first thing the client should think about when starting any new application development project.
On the one hand, it’s absolutely true: it’s much better to spend some time on NDA at the beginning than to face the unwanted consequences of your corporate secrets disclosure.
On the other hand, your NDA must be properly crafted to be helpful, otherwise, it can turn out to be even harmful. Moreover, not every development project requires such an agreement.
So you should consider this question carefully each time starting a new app development project.
In this article, we’ll:
- get familiar with the NDA-related terms and definitions;
- decompose the NDA into parts and look closer at each one;
- answer the most frequent NDA-related questions;
- offer you a universal and customizable NDA template for app development.
Ready to go?
Mobile App NDA Agreement: Why Do You Need It
What Is NDA
As we shortly mentioned before, NDA stands for a non-disclosure agreement. This is a special legal document, an agreement that is applicable in any business situation that requires the protection of intellectual property.
So, NDA is a legal agreement primarily aimed at protecting secret information or ideas that could lead to business losses if they were disclosed to the public or industry competition.
A unilateral NDA is called when one party just receives confidential info. In the case both parties exchange such information mutually, the agreement is called a bilateral NDA, or mutual NDA. Sometimes there are even more than two parties who sign the NDA agreement. In this case, it’s called a multilateral non disclosure agreement.
Why NDA in Mobile App Development Is so Important
Intellectual property laws don’t consider an abstract idea as an intellectual property object. To become a protected intellectual property item, the idea must be worked in practice. In terms of mobile application development, this means the implementation of a ready-made app or at least an MVP.
The main purpose of NDA is to discipline the parties. The probability your idea will be stolen is far low. What is much more possible is that the development team working with one of your competitors will unintentionally disclose your data to them.
Remember that in the case of an NDA breach, you’ll be unable to reverse the situation and make your disclosed information secret again. That’s why the agreement is more of a preventive measure than a source of remedy: whatever the financial compensation is, it won’t cover all the disclosure consequences in full.
Answering NDA-related Questions
- How can I protect my mobile app idea?
As we said before, ideas aren’t covered by intellectual property protection laws. Practically it means that in case someone steals your idea, it will be near impossible for you to obtain satisfaction.
That is why NDA is an important thing in such situations. Usually, the non-disclosure agreement for mobile app development restricts the disclosure of any project-related information outside the range of people who signed this agreement.
As you see, using NDA for app idea protection seems reasonable. Using templates for app idea NDA creation makes it available to achieve higher quality.
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- When do you really need an NDA?
Let’s list and describe a bit the most common reasons for signing an NDA.
- To protect your business secrets. The agreement can protect absolutely any undisclosed information. The most important examples are trade secrets — your working processes show their efficiency, know-how, sales and marketing approaches, or anything that gives your business a competitive advantage.
- To secure any specific information. Not only your idea is an object of legal protection by NDA. There is a lot of less sensitive data but still dangerous in the case of its disclosure. For example, the credentials you share with contractors, someone’s personal data protected by GDPR/CCPA, or any data from other projects that are hard to hide. All this information can be included and protected by NDA.
- To hide your project until the special moment. This usually happens when the team works on something really incredible — a product believed to disrupt the market. Or in a case of severe competition with powerful and mature market players.
Suppose, your app’s USP is based on fixing the flaws of existing vendors in quite a unique way. For a steady and profitable company with a significant market share, it will cost them virtually nothing to implement all the improvements you offer in your app, once they got the required details. They will surely do it manifold faster than you within your own app.
So, the best option here is to keep maximum secrecy as long as it will be possible, or until the release.
- To prevent any potential conflicts between the parties. At the start of any mobile development project, there are a bunch of subtle points that should be better negotiated before the start. Most often, it’s unable to place these points into the usual collaboration contract due to inappropriate general terms. For example, some obligations must exist much longer than the typical lifecycle of the usual contract.
- At what stage should I sign the NDA?
Let’s quickly describe the situations when you should sign the NDA.
|Hiring a new developer||Not every company forces their developers to sign non-disclosure agreements. But most of them do that. Moreover, in situations when the agreement is already signed with the customer, every new employee must sign it, too|
|Signing a new deal||Contracting a new development team, hiring a new freelancer, or sealing the deal with a customer? You surely don’t want your ideas, processes, or any other secrets to become public|
|Partnering with another business||Sometimes mobile applications have more than a single development team, or a single team can be augmented with external developers. When several independent businesses meet each other, it’s time to discuss the NDA signing|
- Can I make an NDA for anything?
Nothing is impossible. But there are some serious obstacles to hiding everything you can see under NDA.
- There is no need for an NDA for already released applications.
- When your contractor is strongly against the agreement, you must first find out the real reason for this. Don’t think that the reason is the intention to steal your trade secrets. It’s just necessary to see the real picture for establishing the appropriate relationships.
- Never ask your investors to sign an NDA. Angel investors and venture capitalists (VCs) usually consider dozens or hundreds of projects. And the first meeting is just a quick check for compliance with the basic criteria. NDA seems to be a barrier here.
Typical Elements of NDA in App Development
Some mistakes in the NDA structure could have severe consequences in the future. Let’s look at the key components of an efficient NDA for app development.
- Parties involved
First of all, identify the parties of the non-disclosure agreement. This can be both an organization and an individual. For example, when outsourcing your project, you can sign NDAs with developers, testers, designers, content managers, and others who have access to company-critical information that could result in financial loss if leaked.
- The subject of confidentiality
Determine what data is sensitive and specify it in your NDA. Here, you can include all information that the disclosing party considers confidential and wants to keep private.
Make sure both parties are fully aware of the information that won’t be disclosed, and that there are no ambiguities, as well. Additionally, if the recipient needs to share your confidential information with their business partners to complete the project, ensure the NDA includes all of them.
- Agreement duration
Each company should come up with the time frame for the NDA, i.e. for how long the commercial information will be kept confidential. NDAs don’t last forever: agreements can specify the time period that confidential information must be kept secret or contain a date when the agreement no longer protects the information. The standard use for NDAs ranges from 1 to 5 years.
- Parties’ obligations
This part of an NDA for mobile app development typically highlights the recipient party’s responsibility to protect the privacy of shared information. For example, private data can be used exclusively for the purposes specified in the agreement and shared strictly with specified individuals who require it to achieve project goals.
This section can also include algorithms of actions for certain situations, for example, if legal authorities request the information.
- Consequences of violating the agreement
Even when a non-disclosure agreement secures the information, sometimes violations happen and the confidential data goes public.
In such cases, the contract should include the possible consequences and penalties. There are various remedial actions, including fines, and compensations for loss caused by data disclosure.
NDA Bad Practices
When you write your NDA, it’s crucial to ensure that the agreement doesn’t contain any points that can result in the refusal of the second party to sign it or even in considering the agreement null and void. Below are the most notable bad practices of NDA design.
Enormously High Penalties
The owner of the non-disclosure agreement for app development has the right to independently set the amount of the fine, taking into account losses to the business in accordance with the law. However, huge amounts can be considered an abuse of the right.
In addition, enormously high penalties quite often lead to the refusal of the second party to sign the agreement with such exploitative conditions. This is surely not a sign of intention to break the rules. Such a huge penalty is a high risk, even crystal honest businesses will likely refuse to sign it.
Posing Inability to Negotiate To
Avoid using unacceptable conditions. It will lead to a loss of trust, and continuous mistakes fixing will cause delays in your project. A well-written NDA, for example, will include appropriate exclusions for areas it does not cover, such as easily accessible information, already published data, and information got independently from the disclosing party.
A broad or vague language that unreasonably restricts one of the parties or allows one to interpret the meaning in one’s favor is also considered a violation. Before signing, it’s essential to ensure the NDA is straightforward and clear to all parties involved and doesn’t imply any non-obvious interpretations.
The business owner decides what information is considered confidential. However, the agreement cannot protect publicly available information or knowledge that receiving party already possesses.
NDAs may have different validity in different countries and jurisdictions. Therefore, don’t forget to clarify the jurisdiction to which the agreement is applied.
NDA Template for App Development
We have finally come to a practical part of our journey. Building your NDA for mobile app development using a template that you could modify to your needs and context is the best idea. You can also use this PDF document. This software development NDA form will perfectly serve mobile app development as well.
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Let’s recap what we’ve learned.
- NDA is highly important when hiring mobile app development teams.
- NDA allows the protection of those data items that won’t be covered by intellectual property protection regulations.
- You can customize the form of your non-disclosure agreement for app development to your needs.
- Be very careful while crafting your NDA. There is a high risk to make mistakes or even including something that will confuse the second party and stop them from signing the agreement.
- Don’t ask your investors for signing an NDA.
We hope this article was helpful to you. Wish you fewer mistakes in your NDA agreements!
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