Outsourcing has become a trend in the IT industry, and it is considered the best option to get the desired output within the budget of the company. And India is one of the most preferred countries to hire dedicated developers for any foreign company. The companies get the benefit of having the best quality coders with them along with their zeal to always create something new. Also, when one thinks of any idea or decides to develop an app catering to their idea, then the first thing which comes to their mind is the security of the idea so that it is not copied by others. And to the rescue comes the NDA which stands for Non-Disclosure Agreement as handing over all the data to some third-party outsource company can definitely be risky. Mobile App Development Company San Francisco already follows this concept of signing NDA which builds trust with their client.
WHAT IS NDA?
NDA in layman’s language refers to a non-Disclosure agreement that ensures the protection of crucial and valuable business information from unnecessary conflicts or from being stolen by others. NDA is a legal and mutual agreement for the Outsourcing Development Company and between the parties involved to maintain the confidentiality of the matter. So, it becomes a legal device that restricts the distribution of information that will be used only by the parties who have signed it.
To some of the app developers it does not sound relevant as they say that in the name of an idea, the clients just have two to three sentences to describe what they think and imagine the things to be. Apart from it many of the clients do not have any proper business plan, investors, or any specific design related to their imaginary app.
However, an NDA is signed between the parties which restrict the involved partners to not to disclose anything outside. Although NDA does not ensure that the idea will not be copied at least it gives a sense of security to the client that their idea will not be leaked by the company to which they outsourced. Also, the best app development companies build long-term relationships with their clients due to their reliable services only.
WHEN TO SIGN NDA?
Signing NDA becomes mandatory under the following circumstances:
- While entering into a business deal of developing the app to create the business from that idea.
- While finalizing the deal with the investors who will back up your project financially.
- While getting involved in the commercial transaction like hiring freelance or part-time developers.
So, above mentioned are three important steps during which the NDA should definitely be signed off between the involved parties to ensure the dignity of the project. This makes sure that the idea which you are sharing with the third party, do not make it public or discuss it with your competitors. As you have seen, the mandate of NDA revolves around keeping the information confidential but let’s see what different aspects of this information are. The confidential information of any company might include the following:
- Personal information of the employees
- Any kind of commercial strategy of the company
- Usage of some unique or diverse software
- Built-in and verified database of the customers and the suppliers
- Any kind of innovative concept related to the product
THE IMPORTANT ASPECTS WHICH AN NDA SHOULD COVER:
It is important that the NDA should cover all the necessary aspects so that it is effective for the parties involved in this agreement. Below covered are some points which should necessarily be part of the NDA:
- The secret information which is to be protected in NDA
It refers to that important part of the information that is to be kept confidential. Usually, this information is written in detail as per the proper schedule. Even the important email regarding notices is also attached. It refers to the idea shared by the client, how is he thinking to execute it in the form of an app or website, what outcomes is he expecting, what is the revenue-generating model of this plan, who are the target customers here and much such information related to the idea should be zip-locked by both the parties.
- Timeframe of NDA
It refers to the timeline for which the NDA will remain applicable. So, both the parties have to hold in the information with them and work upon them secretly till the timeline mentioned in the agreement. Usually, the duration of the NDA is from the time when the project is handed over to the party till the time the project is over. It is never considered a good option to hold the secrecy of the project for infinite time. There should always be a reasonable time limit attached to the contract then only the parties will hold a value or else they take it for granted.
- Results of Breaching the contract
The NDA holds value only if the outcomes are set for releasing the information out in public. So, the NDA should clearly include the details regarding the roles and responsibilities of both the parties with clear instruction regarding the repercussions which one would face in case if any of the parties breaches the contract. This policy keeps alertness in both the parties that they have to adhere to the agreement strictly. Generally, parties imply heavy financial penalties on each other for breaching the contract.
- Duties of the respective parties
The agreement also holds a piece of important information on the duties and responsibilities of the respective parties. Both the parties know what mode of communication or what sort of technology is to be used during the project. This enables both parties to follow the rules easily and develops a good bond between the parties.
- Return of information
The agreement should also have a clause wherein it is stated that by the end of the project, the party who is receiving all the information which means the outsourcing company, should return all the confidential information to their client, or should scrap it so that it is not missed by anybody in future. This ensures the complete closure of the agreement. Although due to technological advancement it gets difficult for the recipient party to completely destroy the data as they must be having it over the cloud, Dropbox, etc. while working on the project, at least this sort of clause will prevent them from sharing the information with any other person or party.
- Including Right to seek Injunction in an NDA
Just the monetary compensation could not cover all the losses that would incur to the client due to disclosure of the secret details and information. Hence, a clause of the right to seek injunction should also be included in an NDA so that the party which is breached can go to court and get a stay easily without any issue. It also includes the details that which court has jurisdiction over legal action, or it will turn into a bigger mess later on.
- Non-binding clause
This clause should also be included in the agreement which states that the parties who signed the agreement are not bound in a life-long relationship. In fact, if any of the parties, at any point of time, think that things are not going as per the set norms then they have full right to withdraw from the agreement and preserve their right. This helps to prevent any issue which may appear later.
- Use of information by permission
This clause states that the client is very clear on sharing the information with the recipient party. So, there is permission granted by the party to the outsourced company of using this information as the client wants and it should be disclosed or used elsewhere.
- Number of parties to be included
It is evident that the two parties are mentioned in the agreement who are – the recipient party and the party who is disclosing or sharing the information. But apart from these parties, the details of all those parties should also be mentioned who will be sooner or later involved in this project. Even they will be bound by the clause of not disclosing the information regarding the project with anyone.
- Mutual Remedies
This clause ensures that if there is any kind of breach from any of the parties then there are some mutual remedies to imply on both the parties which compensate the sufferer and avoids unnecessary legal remedies. This is decided mutually by both parties and is also agreeable to both of them.
The above points show how important it is to have a non-disclosure agreement between the parties. It not just gives the client peace of mind but also boosts their confidence that their unique idea is now lying safe with the third party and even they have started working on it to take it further to the next stage. NDA is one good solution to prevent potential conflicts in the future. So, the idea remains intact throughout its development phase and this helps the client to capture more market as the idea is unique for the market by then.