An NDA Can Save the Day
Bay Oak Law’s Laura Koch provides a timely reminder about the importance of Non-Disclosure Agreements:
NOOK Lawsuit Demonstrates the Importance of Non-Disclosure Agreements
Barnes & Noble, Inc. (B&N) has failed to persuade a federal judge to end a lawsuit regarding its NOOK® eReader. Spring Designs, Inc. claims that the corporate giant used its confidential information to develop the NOOK after the two companies explored possible collaboration in 2009.
It appears that the outcome of this case will be heavily influenced by the fact that the parties signed a non-disclosure agreement (NDA) in advance of their negotiations. According to its complaint, Spring Designs revealed its patented dual screen eReader technology to B&N and its product strategy consultant during a series of meetings and email exchanges from February to October 2009. B&N then released its Android-based, dual-screen eReader on October 20, 2009. Spring Designs filed suit in federal district court a few weeks later, claiming misappropriation of trade secrets, breach of contract, and violations of California’s Unfair Competition Law.
Judge Ware found that summary judgment was not appropriate because there were significant factual issues as to whether B&N breached the parties’ NDA. If the case settles before trial, we may learn little more about the events underlying these claims, but what is clear is that without the NDA, the outcome of B&N’s motion for summary judgment would likely have been very different.
So, what is an NDA, and when do you need one? An NDA is essentially a confidentiality agreement that allows the owner of an idea or invention to engage in negotiations with another entity while protecting the owner’s proprietary rights to the information. If
taking your ideas to the next level requires investors or buyers to take a leap with you, you can’t expect it to be a blind leap. You’ll have to give up the goods before they give up the cash—and an NDA protects your right to take your ball and go home if the game is not to your liking.
A two-page NDA like the one signed by B&N and Spring Designs may not prevent litigation, but it can make all the difference should you need to resort to litigation to protect your rights. So, if you are an inventor or developer with a potentially game-changing idea, an NDA is like a parachute. Don’t think of jumping without one.