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Alex Myers

Alex Myers of Myers & Associates will take over the legal advice column "Minding Your Business." He specializes in business law.

Dear Alex:

I have a great idea for a new phone app.

When I contacted the app development company, they refused to sign my nondisclosure agreement. I want to get my app made, and I want to protect my idea.

What should I do?

Many startup clients face this question when trying to shift from the idea phase to product creation. Until a product like an app is under development, the entire business exists only as an idea, and protection of that idea is of paramount importance to the entrepreneur who created it.

Eventually, the idea will need to be shared. Indeed, the entire foundation for success of the business will depend on the idea being shared as much as possible.

The value of the business is usually not simply in the idea, but in the execution of the business plan, making a product, and building a business around that product.

Nondisclosure agreements (NDAs) can be valuable and serve an important purpose, but the value is often overstated with respect to the stage at which your prospective app is currently situated.

An app-based business idea can be simplified into two components: what the business is going to do, and how it will be done. Unless you are an engineer or programmer, the “what” is usually more thoroughly developed than the “how,” until the product is made.

The “how” is frequently the more difficult component to execute and will require engineers and programmers to develop. If you have the technical components of the “how” figured out, those are ideas worth protecting.

Protecting the idea of “what” your business will do, is often impractical and difficult to enforce. Furthermore, the “what” of your business will eventually become something that should be made known as broadly as possible, not hidden.

From a practical perspective, established app development companies and sophisticated investors in these types of prospective businesses, are not in the business of stealing ideas. If they developed a reputation for stealing the ideas of their clients, nobody would do business with them.

These companies are busy working on building their own businesses and serving their clients.

Additionally, these companies have many clients and many prospective clients. Frequently, prospective clients will approach them with an idea for a business that already exists, or even for an app with functions that are the same as another app that the company has already developed, which could create a conflict of interest with the app developer’s existing clients.

For these reasons, it is somewhat of an industry standard not to sign NDAs, particularly at the early stages of client discussions.

If, however, the information to be shared is truly proprietary and unique, discretion should be exercised, and vetting of business partners and colleagues should be very carefully conducted before disclosure of any unprotected proprietary information.

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Alex Myers is a business attorney with Myers & Associates in Napa. Reach him at alex@myers-associates.com or 707-257-1185. The information provided in this column is not intended as legal advice, nor does it create an attorney-client relationship. The information is not a comprehensive analysis of the law — if you need legal advice, contact an attorney.

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