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App Development
7 minutes read

Why Is an NDA for App Development Important?

By Robert Kazmi
By Robert Kazmi
App Development
7 minutes read

In the news, you might have heard the term NDA, non-disclosure agreement, but do you know why an NDA for app development is important? A mobile app idea is a valuable piece of intellectual property that has the potential to be the next big thing. Think about ideas like Facebook, TikTok, or Snapchat and how quickly they gained popularity, and how valuable those app ideas are. Therefore, protecting a mobile app development idea before it can be brought to life and market is important. 

A non-disclosure agreement is a legal document that can help you or your business protect your valuable intellectual property or trade secrets. In this post, we will explain what NDAs are, the different types of non-disclosure agreements commonly used, and why they are important in app development.

What are Non-Disclosure Agreements? 

An NDA, or non-disclosure agreement, is a binding legal document that can be used in almost any business scope to protect any information, intellectual property, trade secret, etc., that requires special protections. The explicit purpose of non-disclosure agreements is to protect information or ideas that could lead to business losses if they were revealed to the public or industry competition

Every party involved in an NDA will work to ensure that all intellectual property and confidential information is protected. Everyone who signs one of these legal contracts agrees not to discuss or tell anyone else about the confidential information covered by the NDA for the duration of the agreement. In some cases, an NDA could last for the entire duration of your life. 

In the mobile app and web development industry, you might find that non-disclosure agreements are called something else. While an NDA could potentially go by other names, this doesn’t change the nature of the legal contract. In the app development industry, NDAs are also sometimes called:

  • Confidentiality Agreement
  • Secrecy Agreement 
  • Confidential Disclosure Agreement 
  • Proprietary Information Agreement 

Each NDA is unique, so it is important to clearly define the terms of your agreement. If you are unsure about anything, you should seek legal advice from your attorneys. At the most basic level, your NDA agreement needs to identify and define the following things:

  • Who is bound by this agreement?
  • What information must remain confidential?
  • What happens if the agreement is broken?

Who is bound by this agreement?

Typically, if two businesses enter into a non-disclosure agreement, then all company employees who are handling the information covered in the agreement will be bound to confidentiality. However, it is very important that you clearly define the parties bound by this agreement

For example, if you are working with an app development company that utilizes subcontractors, you need to ensure that your NDA covers these individuals. Realistically, anyone who will have access to your confidential information needs to be covered in the NDA. 

What information must remain confidential?

This is another part of the agreement that you can decide for yourself. Any information that could hurt your business prospects, is a trade secret, or an idea that has yet to be realized is a good thing to include in your NDA. 

For example, if you have an app idea, even if it is just a couple of sentences or thoughts and nothing else, this is a good piece of intellectual property to protect. On the other hand, if you have an algorithm that you developed to perform a certain task for your software, this is a trade secret that you will want to keep confidential. Of course, non-disclosure agreements can cover just about anything. Still, the most important things to protect in app development are unrealized ideas, code, algorithms, and other unique technical developments created for your project. 

What happens if the agreement is broken?

In the event an NDA is broken by one of the involved parties, legal action will be taken. Typically, this will lead to a lawsuit and likely will require the party who broke the contract to make restitution in the form of financial compensation. There could be other penalties assessed as well, depending on the terms of the contract and the litigation process. 

The Different Types of NDAs

There are three main types of non-disclosure agreements. Each type can vary in size based on the specifics of the confidential information being protected, the project management team, the size of the project, and so on. The main three types of NDA are:

  • Unilateral
  • Bilateral 
  • Multilateral 

Unilateral NDA

A unilateral NDA is only binding one way, as the name suggests. This type of NDA is probably the most widely used, especially when protecting an app idea. Basically, two individuals or companies enter into an agreement in which the party receiving confidential information agrees to keep it safe and not disclose it. 

These agreements are designed to protect trade secrets and intellectual property. They only need to be binding one way because confidential information is only being shared in one direction. 

Bilateral NDA

As the name would suggest, this NDA is binding two-ways. The two individuals or companies who enter into a bilateral NDA are both equal partners in protecting confidential information. Typically, bilateral non-disclosure agreements are used when two companies are working on a joint venture, considering a merger or acquisition, or collaborating in other ways. 

Both parties are equally responsible for upholding the confidentiality of the information contained in the agreement, and they are liable to one another in the event that one party breaks the agreement. 

Multilateral NDA

This type of NDA involves three or more parties. It is similar to the bilateral NDA in that all parties are equally responsible for protecting confidential information. When there are a lot of stakeholders involved in a project, a multilateral non-disclosure agreement tends to be the easiest path to take, but the more parties involved in an agreement like this, the more complicated it becomes. 

Why are NDAs Important in App Development?

An NDA is a legal device that can be used to help you protect your intellectual property and trade secrets before you can secure an app patent. All of the best mobile apps started out as an idea. If you don’t have the technical expertise and ability to build a mobile app, you will have to hire an app developer to help you bring your idea to life. 

Non-disclosure agreements help protect your idea. Without an NDA, there is nothing to stop someone from stealing your idea or trade secrets after you explain it to them. These contracts are especially important for startups who are trying to get a foothold in the industry. Oftentimes companies cannot afford to hire a full team of developers to their staff full-time. Therefore, they have to work with a company or freelancer to get the job done. NDAs help protect a business’s interests when working with a company or freelancer. 

Final Thoughts 

If you have an idea for an app, reach out to an app development partner to help you bring it to life. If you’re concerned about the security of your idea, do not partner with any developer who will not sign an NDA. A trustworthy app developer will have no issues signing and adhering to an NDA.

An NDA for app development projects is very important; reach out to a development partner who takes the confidentiality of your ideas as seriously as you do.

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