Non-Disclosure Agreements (NDAs) are versatile and necessary tools in the arsenal of anyone, inventor or corporation, who handles intellectual property. A NDAs is a contract whereby the signer agrees not to disclose certain information, except under terms as described in the contract. A non-compete agreement (NCA), inhibiting use of the information in competition with the disclosing party, is often included as a clause within the NDA. A NDA can be obtained at little to no cost, although one needs to be cautious in making sure the agreement will fit the use intended. NDAs should be used as part of a larger strategy and may be used in conjunction with patents and patent applications. This paper identifies the principal arguments in favor of and counter to NDAs.

1. Cost - NDAs are perhaps the lowest cost of protection for an invention. Often a simple agreement can be obtained for little to no cost. Although cost is one of the primary benefits of NDAs, this advantage has a tendency to breed over reliance.

2. Breadth - NDAs provide broader protection than patents, which is a reason justifying simultaneous use of NDAs and patent applications. Breadth includes both positive and negative aspects. Broad protection is beneficial at nearly any time. Most NDAs, however, struggle in determining exactly what is and is not covered under the terms of the contract. A common example is where there is no recording of what information was communicated during the discussion. The ambiguity can lead to problems should the matter ever come to litigation. The disclosing party wants the contract interpreted broadly including all information related to the actual disclosure, whereas the disclosee may wish to interpret the coverage much more narrowly. This can be a costly issue to resolve.

3. Integrity of the disclosee - There is an old adage that a contract is only as good as the person signing it. One is safer using an NDA with those people of known high integrity and is of little value with person having low integrity. This integrity problem is compounded with the inventor’s inability to monitor the disclosee. Often people will not have an NDA signed by persons having high integrity, but this leads to the next problem.

4. Integrity of the Process - Inventors often get in a hurry and forget to use the NDA. For example, flaws can easily occur when one has the invention witnessed, when speaking to a friend, or when forming a relationship with a marketer or manufacturer. Perhaps this forgetfulness occurs due to the inventor perceiving everyone to be on the same side or perceiving people will respect the interests of the disclosing party. Even if they are and do, the disclosure in the absence of an NDA can constitute a public disclosure and void any future protection. Public disclosure is a legal point that has nothing to do with the integrity of the people hearing about the invention.

5. Integrity of the Document - Each state has laws regulating the validity of NDAs and other such contracts. Some states show little concern for NDAs and regularly find them invalid. Should the contract be flawed, it may provide no protection at all. In some states one invalid clause will invalidate the entire contract. One can guard against this problem by seeking legal counsel on the validity of the contract before reliance is placed on it.

6. Delays necessary filing date of a patent - In the US, a patent must be filed within one year of the first public disclosure or offer for sale. Nearly all other countries require the patent application to be filed before the first public disclosure or offer for