Thoughts on NDAs

The following article should not be taken as legal advice. I am not a lawyer. You’re welcome to discuss my opinions with your lawyer, of course.  ;-)

NDAs, aka “non-disclosure agreements,” are common to every industry, but the video game industry has a special fascination with them. We fear that our ideas will be stolen. We worry about alerting competitors to our plans (and thus giving them time to respond more effectively.) We worry about losing control of the marketing message.

Your idea isn’t as sacred as you think it is

In general, we worry excessively — particularly about the theft of our precious ideas. The overlap between companies who will steal raw ideas and companies who are competent enough to execute upon them is very, very small. And the number of ideas that are genuinely worth stealing is even smaller.

Don’t confuse the theft of ideas with game cloning — the latter is common because execution has already taken place and the market for the idea has been proven. Executing on a design and proving out a market are hard things to do, and only the best companies (Valve, Blizzard, etc) successfully do so on a regular basis.

Evaluating the circumstances around an NDA

Nevertheless, it’s fair to say that sometimes game developers really do have good reason for wanting to keep a secret (which may or may not relate to design ideas.) And sometimes, that secret must be shared for business purposes. Time to whip out the NDA, right?

Not necessarily. In my opinion, an NDA is only appropriate in certain circumstances. Those circumstances depend largely upon who you’re speaking to and what you’re offering that person, aside from awareness of your secrets. An NDA is basically a company’s way of saying: “we think you can probably be trusted with the information you’re about to receive, and we know that NDAs are extremely difficult to enforce anyway, but we hope the act of signing this document will make you slightly less likely to (carelessly or intentionally) spread our secrets around.”

That’s an OK message to send to potential business partners who might ultimately reap some value from their interactions with you. But, for example, it is probably not an appropriate message to send to friends who you’re asking for advice, for help networking, etc. An NDA only has a very small chance of actually inhibiting malicious or careless behavior — enough to barely justify the existence of the NDA, but not enough to risk offending your friends or to reduce the likelihood that they will feel inclined to help you. Remember that you’re essentially asking for a gift. Imagine calling your neighbors and asking if they will babysit your kids, but requiring them to sign a legal agreement first. This is similar.

The same is true for friends-of-friends when you’re asking them for free advice, etc. It is true that you don’t personally know these people, so “trust” is an issue. But at the same time, they don’t personally know you, so why should they give you anything for free? The answer is simple: because someone they do trust and respect has essentially requested a favor on your behalf. How are you going to reciprocate?

Signing an NDA isn’t always as simple or trivial as it seems

The aforementioned examples are not the only situations in which an NDA might be inappropriate or unhelpful. NDAs can change the nature of a conversation, and it pays to consider how they do so.

Asking someone to sign an NDA immediately cools the air. It shifts the conversation from whatever it may have been (warm? exciting?) to something more formal and wary. It creates a little bit of friction. Sometimes this is what you want, but sometimes it isn’t. My point is: consider the circumstances and make an intelligent decision. Don’t be on autopilot with NDAs.

Some venture capitalists and publishers won’t sign a developer’s NDA on principal alone. They are pitched so many concepts on a regular basis that it’s inevitable some concepts will be similar, if not identical. An NDA might cause them to be sued by a developer who mistakenly believes her idea to have been stolen. An NDA might prevent a VC or publisher from making obvious, helpful comments, simply because another developer made similar comments earlier that month. I can sympathize, having been exposed to a great many (similar) concepts while I was working for Microsoft.

Carefully consider whether you really need someone to sign an NDA. And if you ask someone to sign and they refuse, do not immediately assume that it means they are treacherous fiends. It certainly might mean that, but it could also mean they don’t care enough about hearing your idea to sign your NDA. Not exactly the sentiment you want floating through someone’s subconscious when you’re trying to impress them!

For these (and for many other) reasons, I very rarely ask people to sign NDAs of my own unless I’m compelled to do so by an obligation to a client or partner. I’m simply unconvinced that the value of an NDA is great enough to justify the hassle and the negative sentiment it might generate, as opposed to the value of unrestrained feedback on my ideas and plans, which I truly appreciate. Your mileage may vary, of course.

PS. Danc posted an article on the counter-productiveness of keeping new game ideas secret back in 2005. As always, his thoughts are worth your time.

79 Responses to Thoughts on NDAs

  1. I have a simpler view:

    - NDAs used to keep INFORMATION secret are useful (but be realistic about how porous they can be)
    - NDAs to keep IDEAS secret aren’t very useful at all.

  2. Kim — nice reduction. :-)

  3. To play devil’s advocate:
    Is there a marketing reason to use NDAs? Timing of game information release to the general public is a big part of a marketing campaign. And it’s true that a NDA doesn’t prevent an idea from being known to insiders, but it may slow or stop its general release through unofficial channels.

    (Of course, I also think game companies should have more marketing further in advance of their games, but that’s a whole other thing.)

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