Am I compromising my business by signing NDA's?

Design Discussions design employment
1

Something I’ve been thinking about alot lately. As well as a discussion, I wanted to share with other freelancers the pitfalls!

Up until now, I’ve always had enquiries from people who want to know how to develop a shoe or a shoe line. I like to give back, so I always respond to all enquiries.

But I’ve been pondering the fact that most big shoe companies don’t give these enquiries the time of day, its starting to dawn on me why.

In six years I can only think of four potential businesses that contacted me where their idea has come to fruition and is working well. When you consider I’m getting about three enquiries a week at the moment, then it’s not many is it?

I only get involved as a designer if I think they’ve got a chance and bizarrelly most of the enquiries that require me to sign an nda before the ‘invention’ is revealed, I can actually ‘guess’ what the invention is before they’ve even told me, as the same three ideas come up again and again.

You have to question why no ones managed to make a success of these ideas when there are already countless patents already filed and even some products in the market place but not exactly setting it alight.

What worries me is that I took an enquiry recently, the product was revealed to me and a few days later, I realised I’d developed a product that was very close to that indeed, but I’d developed it about four years ago. I work on alot of very varied footwear and I’m starting to think that theres a really big risk of this happening again, but with a product I’ve just developed, which then gets delivered to retail six months after I’ve signed an NDA.

I think I’m compromising my business incase a client of mine (i.e. footwear business already in the trade) briefs me to do something and I find I can’t do it because I’ve signed someones NDA!

A few years ago I made a big mistake - I signed an NDA for product that is actually already out there, but agreed to not reveal/work on other product like it for five years (you live and learn). I’ve had enquiries from businesses already out there and already developing this product,but I had to turn the work down because of this client (who incidentally has never managed to get their product off the ground!).

I’m now thinking that I need to be more careful, am considering changing the wording on my website also. I’m thinking that I shouldn’t sign ndas or discuss ideas in most cases because 1/ the enquirer does not have a chance in hell of ever getting it to market (this is the brutal honest truth) 2/ It compromises my business.

I wanted to warn other freelancers out there about the pitfalls of dealing with these kinds of enquiries and also I’d appreciate your thoughts and feedback.

2

it’s a good story you’ve started.

I have signed between 2 and 10 NDA’s per year for the past 9 years. They are just about always the same. The only clause I have crossed out or negotiated away is always about term limits (always reject the term “in perpetuity”) or applicability: substituting generics for “this project only”.

Your issue seems complicated by working in a focussed, niche market. Probably, this is fairly common in practice. I have never run in to your problems of existant products that are similar to NDA subject. I have experienced similar or competitor product released during development of said NDA project.

But, it’s an interesting issue, the duty to notify current company requesting NDA of your prior knowledge, itself which may be controlled by prior NDA. This is more a conflict of interest, but still an unknown area. I’d be very interested if any contributers have encountered such situations. There is of course always opportunity for professional, private advice.

As far as I understand, NDA’s only real defensible purpose is to satisfy the patenting process requirement of no public disclosure prior to filing; public being the keyword, once you sign you’re no longer public.

3

Often I sign the nda to find out that the product isn’t patentable - it can only be registered, it’s not an invention, only a design…

These are the ones that IMO could cause me most problems. The idea in itself isn’t good enough to construct an entire business out of, but it might be an idea I’ve thought of myself,independantly, perhaps just one design in a fifty style collection!

4

It sounds like a minefield in your particular case, primarily because, as far as I can tell, you’re signing NDA’s with people or companies with similar expertise to yourself. With virtually all the NDA’s I sign, I have design and manufacturing expertise, whereas the other company has ‘new technology’ expertise, so there is less chance of a conflict. In the past I have once been shown something very similar to another project I’d previously worked on; in that case I had to turn the work down, but these things happen, I’m not sure anything can be done about it except making sure you only sign with people you think are serious.

One thing I always insist on is that any parts of a project cease to be covered by the NDA as soon as they enter the public domain. I’m surprised if you’re signing NDA’s which don’t have that clause, it seems to be pretty standard. It’s important that the wording refers to parts of a project, rather than the project as a whole. But that would get you out of the situation where you signed an NDA for a product that already exists.

I’m not sure I understand your worries about being shown something similar to a project you’ve already worked on. As long as you have some way of showing when you did the work - signed sketches, time-stamped images, invoices, bills from a modelmaker etc - you’re covered. Or have I misunderstood something?

It does seem that you’re compromising your business though, if you’re signing NDA’s covering products that won’t get to market. One way to solve this is to tell enquirers that you’re happy to discuss things with them but insist they must have filed a patent application on their invention (doesn’t need to have been granted, just that the application has been filed). This has two effects: first it weeds out those who aren’t really serious, because a patent application takes time and effort. Second, for the application to be accepted, there has to be at least some originality. In the end it might not be enough to get a patent granted, but it would probably exclude those three ideas you keep seeing time and again…

5

The most problems I’m having with ndas is signing them with people who are new to the trade.

Thanks for the advice regarding suggesting that they getting the idea patented first. Of course they often come to me to do the drawings, in every case (where its been a new ‘invention’) I’ve refused because I don’t believe in their idea.

It amazing how many people have an idea, yet there is no business plan, no funding and no thought process or research. I’m going to rewrite the new clients section of my website accordingly.

I’d love to mention the ‘three ideas’ in this section as in ‘if this is your idea for a shoe, don’t call us, we’ll call you.’ But dozens of people would sue my ass off! :laughing:

6

I’ve had the same thing happen. I can also almost always guess the project, so I usually do… they are usually flabbergasted, and they ask me how I guessed, and I say because it’s not a new idea and let them know their is no point to the NDA. If that doesn’t work I’ll throw in a “If you can’t trust me to keep my mouth shut, how I can trust you to pay me?”

7

good thread. as a consultant footwear designer i know exactly what you are talking about and get the same number of crazy ideas for a “new” footwear design as regularly. the way i look at it is this-

  1. i don’t mind signing any NDA, but make sure there is a clause that says proprietary info is not subject to anything that is already in the public domain (ie. already patented or somewhere out there) or that I already know from previous experience or professional industry knowledge. this avoids keeping something secret which you have already done or been approached before to do.

  2. For sure more than 80% of the ideas that come across my desk don’t go anywhere, my involvement or not. As i see it, if they can’t make it to market, it’s not likely that they would have the $$$ to sue you for breach of NDA.

  3. A contract is only as good as the paper it’s written on in most circumstances. esp. those downloaded off the net by some inventor such that in combo with point #2, not only would they not have the will/$$$ to sue you, it’s not likely the boilerplate NDA would stand up to much legal scrutiny.

Bottom line, I look at NDAs/contracts as a measure of good faith. if i can put a potential client’s mind to rest by signing one so we can discuss a project, so be it. The best defense to getting in trouble is a good working relationship, not any sort of contract/NDA/paperwork.

As an aside, I also note that I find there is an inverse relationship to the amount of paperwork/contracts/NDAs needed by the client to the viability of a project. Nowadays when a client contacts me asking for NDAs, talking about patents, etc. more than not I find it’s a waste of time to even pursue. these are often the “closet inventors” that think they have an idea that will change the world, and don’t know a thing about the industry or how products come to market (ie. first one in usually wins, patent or not).

I actually find it kind of funny how I can work on a project for a large multi-national corp. with no NDAs and less contract BS than some guy in his basement…

still, i’m not above entertaining any client to an extent and you never know when the client could be the next phil knight…

R