03/ 31/ 2006
The expert:
Jim Sargen
CEO,TriActive America
www.triactiveamerica.com
San Luis Obispo, Calif.
I should have seen it coming. All the signs were there, but I was too busy running my business to notice that a contract worker was stealing a business idea from me. Luckily, it was not a fatal blow to my then start-up company, TriActive America, which manufactures and distributes outdoor fitness equipment. And I could have made him pay for it-if he had only signed a non-disclosure agreement.
NDAs, also called confidentiality agreements, legally protect a business' proprietary information, such as a new product design or a marketing strategy, from competitors who might steal it and reap the benefits. NDAs can't stop someone from stealing your secrets, but as my lawyer has told me for years, it makes his job a lot easier. Having an NDA allows employers to sue for damages. Plus, a judge can stop the offender from disclosing more information.
When technology started becoming more pervasive in the early 1990s, I started requiring all employees or contract workers who came into contact with any of my company's proprietary information to sign an NDA. But sometimes, for whatever reason, a few fell through the cracks. The contract worker who ended up starting a new business with my idea came highly recommended from close business colleagues.
I didn't ask him to sign an NDA because I didn't see him as a threat. Needless to say, he was, and that's when it finally hit me: Non-disclosure agreements are a fundamental part of business, especially when you're dealing with innovative ideas like many small businesses do.
Protecting your business' proprietary information can mean a leg up on the competition. And you have to make it a part of the process before a new employee or contract worker is exposed to that information.
Don't worry about employees not understanding or being offended. Just ask around: NDAs are becoming more commonplace, especially with digital cameras and cell phones with built-in cameras and flash drives that make it easy to snap a picture or download some documents.
If you don't know where to start, ask your lawyer to help you create an NDA that is specific enough to cover your business, but not so broad that you could shoot a cannon through it.
Your proprietary information is just that-yours. If you're putting the time, money and creativity into a new idea, you should be the first to get the reward for it. NDAs don't ensure that your business will always have the competitive advantage, but they do give you a competitive lead time.
How It Happened:
I've always relied heavily on contract workers, many of whom work closely with my company's trade secrets. As my business grew, I also relied on my employees to take care of the administrative duties associated with hiring contract workers. In doing so, I no longer kept track of who had signed a non-disclosure agreement.
I was naive to think that I could automatically trust a contract worker who came highly recommended.
My lawyers always insisted that every person who came into contact with my company's trade secrets sign an NDA. But until my worst nightmare came true, I never saw them as a fundamental part of doing business.
How I Fixed the Problem:.
Non-disclosure agreements have become part of the new-hire process. Our staff customizes NDA templates for new hires. Once they sign it, we file it away. It's a seamless system, which means we have all of our bases covered.
I have peace of mind knowing that no one who comes into contact with my proprietary information can get away with stealing my trade secrets. Like my lawyer says, NDAs can't stop anyone from stealing, but they can make it harder for that person to use the information.
NDAs are now a part of our company culture. We explain them at our staff meetings and answer any questions. This increases buy-in.
