As startups emerge and new technologies are developed, Software as a Service (SaaS) is dominating the landscape. If you’re planning on entering negotiations with another company, creating a SaaS non-disclosure agreement (NDA) can be crucial. SaaS non-disclosure agreements offer mutual protection for both companies, so your proprietary technology and confidential information cannot be misused without serious consequences.
Here’s how to determine whether you need a SaaS NDA.
What is a SaaS NDA?
A SaaS NDA is a type of non-disclosure agreement. NDAs can be unilateral (protecting one party) or mutual (protecting both parties). SaaS NDAs are typically mutual agreements between companies, since both parties will need to disclose confidential information before deciding whether to work together.
Examples of protected confidential information include:
- Software technical characteristics
- Financial information
- Marketing or business plans
- Customer or prospect lists
- Software or development processes
- Product prototypes or specifications
To create an enforceable SaaS NDA, the protected information must be clearly defined in the agreement—and not so broad that it includes information which isn’t actually confidential. A SaaS NDA generally should exclude publicly known information and other common types of exceptions.
The SaaS NDA should specify who is authorized to access the disclosed information. This can help ensure that the information remains protected and is only used for legitimate business purposes authorized under the NDA.
Many states prohibit non-disclosure agreements from restricting disclosure of unlawful employment practices like harassment, discrimination, and retaliation. While this is typically more applicable to unilateral employment NDAs, it’s important to understand state and federal laws before drafting an agreement to ensure compliance. Agreements that do not comply with applicable laws will be unenforceable.
When should you use a SaaS non-disclosure agreement?
SaaS non-disclosure agreements should be used anytime you expect to negotiate a potential deal involving the disclosure of confidential information—ideally before any confidential information is disclosed. It’s generally recommended that both parties agree upon the terms and sign the NDA early on in the process. Otherwise, you could unnecessarily expose your company’s proprietary information or technology with limited legal recourse.
Is an NDA for software development required?
While NDAs may not be strictly necessary for SaaS company transactions, they are a prudent measure to protect the company’s intellectual property. By using NDAs to establish confidentiality and restrict access to proprietary information, companies can help safeguard their competitive advantage and maintain the value of their software services. Similarly, companies contracting with SaaS providers need to keep their own trade secrets, intellectual property, client details, marketing lists, and other confidential information protected.
How to create a SaaS NDA
Creating a SaaS NDA is very similar to drafting a standard NDA, but specifically tailored to circumstances of a SaaS company. Here are a few main factors to include:
- Legitimate business purpose: Your agreement must protect a legitimate business purpose, such as protecting your proprietary software development tools or other sensitive business information.
- Comply with legal obligations: The confidential information protected by the agreement should comply with your company’s existing contractual obligations. Exclude exceptions, such as information known to the public or which was already disclosed without additional confidentiality obligations.
- Include notice required by federal law: In addition to any state-specific requirements, under the federal Defend Trade Secrets Act of 2016, you should include notice regarding immunity from liability for limited disclosures of trade secrets to individuals.
While it might be tempting to use a one-size-fits-all template, that can expose your company to significant liability—but having a lawyer research and draft an agreement can be time-consuming and expensive.
Instead, meet SixFifty in the middle. Our proprietary technology helps you create automatically generated, legally compliant, SaaS non-disclosure agreements. Simply answer questions about your businesses and the agreement and download the automatically-generated document.
Discover SixFifty tools for SaaS NDAs
You can create SaaS NDAs faster and easier than ever with SixFifty. Our legal tools pair easy-to-use technology with real legal expertise, so you can get the SaaS non-disclosure agreements you need, at a price you can afford. Ready to create your own NDA? Reach out today to schedule a product demo!
