Entrepreneurs often ask their lawyers for “bullet-proof” non-disclosure agreements (NDAs) that will prevent their business associates from stealing their great ideas.
The problem is, no such thing exists.
We discussed in this previous blog how an NDA won’t necessarily protect your ideas. The best way to protect an idea is to jump through the legal hoops that turn an idea into intellectual property– as we discuss in this blog.
Signing an NDA might make another party think twice before spilling (or using) your ideas, but in order to enforce it you’re going to have to go to court.
Before you even call a lawyer, you should think carefully about whether you’ve really got any secrets to protect.
This recent case illustrates how one business wasted time and money fighting to protect a “secret” that wasn’t.
Sweet Street
In 2011, Sweet Street Desserts began to discuss with Better Bakery the idea of designing a pretzel sandwich. (Yes, those are their real names!)
The parties signed an NDA that protected the “designs, recipes, processes, formulae and other confidential information” revealed by Sweet Street during the product development process.
According to Sweet Street, Better Bakery agreed orally that Better Bakery would provide Sweet Street with all the pretzel sandwiches it wanted for two years, and in return Sweet Street would design the sandwiches and pay Better Bakery for sandwich-related R&D.
However, the parties did NOT have a non-compete agreement saying that Better Bakery couldn’t make pretzel sandwiches for others.
The eventual result of the collaboration was a pretzel sandwich which “includes open ends and precision slits on the top of the product, which bloom open during baking to reveal the contents inside.”
Sweet Street sent out sample sandwiches to potential buyers.
So Far, So Good. What Could Go Wrong?
As we discuss in part 2, the story doesn’t have such a sweet ending…
The information and materials in this blog are provided for general informational purposes only and are not intended to be legal advice.
