Fight Idea Thieves With Nondisclosure Agreements

In the entertainment industry, not even ideas are safe, which is why nondisclosure agreements may come in handy when discussing potential movie plots, recently written lyrics or any other creative thoughts.

nondisclosureagreementAny discussion of an idea without an NDA could lead to the thought being stolen, without any repercussions. Take, for example, the story of Bonnie Vent and her idea pitch to Mars Candy. Her story is a helpful illustration of the importance of NDAs. The freelance entertainment broker suggested to the candy company a cross-promotional campaign between The Addams Family characters and M&M’s candies. In an idea misappropriation claim against the candy company, Vent claimed that her idea had been rejected by Mars. Shortly after, though, the company began running advertisements featuring M&M candies as characters from The Addams Family.

Vent’s claim for compensation was eventually rejected by the federal Second Circuit Court of Appeals. The reason was that the cross-promotion idea was not shared with Mars in confidence. Without an NDA, the candy company was free to use Vent’s idea as it pleased, without compensating her for it. Legally, the idea wasn’t stolen at all, it was simply shared and used.

What the typical NDA consists of

An NDA is a document that states that a disclosed idea will remain confidential for a certain period of time, often between one and five years. Sometimes, to truly convince a potential partner of the value of a potential project, the details must be shared in full. In those cases, it would be rather unfortunate if the generosity of sharing a fully fleshed-out idea was exploited without compensation. The NDA ensures this doesn’t happen – at least not without repercussions.

An NDA, Nolo explained, consists of three fundamental portions:

  1. An explanation of what information is and isn’t confidential.
  2. Obligations of the party receiving the information.
  3. The time period through which the idea must remain under wraps.

NDAs will typically include a definition of what constitutes confidential information or trade secrets. Also, typically a portion of the idea will not be included under the confidentiality agreement, meaning that that information, and only that information, may be shared.

Obligations of the receiving party are, basically, an outline of the ways in which information must be kept confidential. Generally, the agreement will require that the party hearing the idea shall not share it with any entity outside of the NDA, request that another party violate the deal or have others acquire the information through any means. All of these actions would be in breach of the NDA.

Lastly, an NDA will typically include a specific time period for which the idea must be kept confidential. As mentioned before, this is usually between one and five years, with the sweet spot being around two, according to Invention Partner.

Avoiding an NDA

An NDA is typically the safest way to make sure that an idea isn’t used without compensation, though these agreements have their drawbacks. The biggest issue is that often, inherent in NDAs is a degree of mistrust. The receiving party is being asked to sign this deal because there’s an assumption that without the contract, the idea would be shared. There are ways around this, though they too have some faults.

For example, one way to avoid an NDA is to not disclose the most important details. If some sort of work around that doesn’t require the disclosure of essential information is possible, then an NDA isn’t necessary, and that potential implication of mistrust can be avoided. However, this will take sorting out the confidential details from the less important ones, and can take away from the impact of the idea.

It’s best to consult an attorney with extensive knowledge of entertainment law and nondisclosure agreements to determine whether an NDA is the right move or not.

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Anthony R. Caruso is a business transactional attorney in New York and New Jersey with experience in structuring, negotiation and completion of legal deals involving business, entrepreneurs, athletes and performers.

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