Why Ethical Collaboration Is Better Than An NDA

There is a big step between having a Non-Disclosure Agreement (NDA) and Ethical Collaboration.  (The Ethical Collaboration Agreement is FREE and available here.)

An NDA is used any time someone wants to protect their ideas or technology.  For example, I will have an NDA in place with a contract manufacturer, especially when the contract manufacturer might produce products for my competitors.  The NDA will prevent the manufacturer from sharing my product information with my competitor.

But does the conventional NDA help us collaborate?  No.  In fact, it prevents us from collaborating.

Let’s say that there is a manufacturing problem that comes up with my product.  We would like to get in a conference room with the manufacturer’s engineers and work out a solution.  We would like to get the manufacturer’s input to the product design so that the product is easily manufactured and, hopefully, better for the consumers.

But what happens in that conference room?

The manufacturer gives me some great ideas that dramatically improve the product.  That is great.

But wait, can I go get a patent on those improvements?

Actually, the improvements are still owned by the manufacturer.  Our conventional NDA does not include any IP transfer provision, so any ideas that the manufacturer gives me are still owned by them.  I cannot get a patent on those improvements, and if I do get a patent on someone else’s idea, my patent is invalid for lying to the patent office.

With Ethical Collaboration, we include an IP transfer provision, where everyone agrees to give their contributions to the other party.  If I was to suggest an improvement to the manufacturer’s workflow, they are free to use that idea.  If the manufacturer helps me improve my product, they agree to transfer the idea to me.

Ethical Collaboration is the way we want things to work.  We want to be able to share ideas and help each other.  In our example, the manufacturer wants to add value to my product because I will keep using them as a supplier and will value their input.  Their ideas will help establish a deep, trusting relationship with me, and I will gladly pay a premium for their advice and manufacturing ability.  As an entrepreneur, I value insights and ideas from everybody because that helps me improve my product.

The Ethical Collaboration Community Agreement is FREE and available for anyone to sign and become a community member.  Some people may want a customized, mutual Ethical NDA that may be more appropriate for specific, two-way interactions, such as part of a supplier agreement.

For service providers, advisors, mentors, and other people who interact with multiple startup companies, there is an Ethical Collaboration Certification, where you can use the Ethical Collaboration credentials to advertise your adherence to Ethical standards.