NDA

An NDA is a contract. The abbreviation stands for “Non-Disclosure Agreement.” Whoever signs an NDA legally commits to not disclosing certain information. This can be business figures, technical plans, source code, or negotiation details. The contract defines which information is protected, for how long, and what happens in case of a breach. NDAs are not unique to the tech world, but they are especially common there.

NDAs as a shield for innovation

Many companies live off information that no one else knows yet. A startup with a new idea, a corporation with an unpublished product strategy, or an AI lab with a not-yet-released model – they all need a way to let negotiating partners in on the knowledge without immediately giving it away. This is exactly where the NDA comes in.

Without this safeguard, an open conversation would be risky. Anyone discussing a possible collaboration has to share details – and risks the other side disappearing with them. The NDA creates a controlled basis of trust: you speak openly, but not unprotected. A breach can lead to claims for damages or other legal consequences, which are regulated in the contract.

Structure and types of an NDA

An NDA typically contains four core elements: First, the definition of which information counts as confidential. Second, the duration – that is, how long the confidentiality obligation applies, often one to five years, sometimes unlimited. Third, exceptions, for instance when information is already publicly known. Fourth, the legal consequences of breaching the contract.

There are two basic types. In a one-sided (unilateral) NDA, only one party commits to confidentiality – for example, an applicant who gets insight into internal systems. In a mutual NDA, the obligation applies to both sides – typical in negotiations between two companies that both share sensitive information. A common misconception: an NDA does not protect ideas as such, only information that is actually disclosed. Whoever doesn’t write anything down or show anything has nothing contractually secured either.

An important distinction from similar contracts: the NDA only governs confidentiality, not ownership rights. It is not a patent and not a copyright. It does not prevent someone from independently developing the same idea – it only prevents someone from talking further about what they learned under the agreement.

NDAs in tech, AI, and the news

In the tech industry, you encounter NDAs in almost every phase of a company. Developers sign them when starting a job so they don’t take trade secrets with them. Investors sign them before their first deep look into a startup. In acquisitions – for example, when a large corporation buys an AI company – the NDA secures the negotiations, which often take months.

The topic also comes up regularly in AI news. When it becomes known that a company like OpenAI or Anthropic has allegedly obligated employees to stay silent about internal matters, an NDA or a similar clause is usually the background. Critics sometimes accuse such contracts of not only protecting trade secrets but also suppressing legitimate criticism. That’s why legal experts distinguish between legitimate confidentiality and so-called abusive clauses, which are unenforceable in some countries.

For private individuals, an NDA is rarer – but not unheard of. Anyone participating as a tester in a beta version of an app or a game often also signs a non-disclosure agreement. The term is then the same, just the scope is smaller.