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Roger
Roger, Lawyer
Category: Intellectual Property Law
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This question is under the heading of Intellectual Property:

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This question is under the heading of Intellectual Property: I am the Owner of a Business concept, and need an Angel investor to make it fly. I have an NDA (Non-disclosure Agreement) form ready to give to potential Angel Investors. I contacted a person (He) who works for an Angel Investor. He says he also has contact with several other Angel Investors and wants me to send the NDA form to him, so He can sign it, even though He is not the investor. The NDA form has two places for signatures: The "Owner" and the "Investor". What kind of protection do I have if He signs it, and not the Investor. He thinks that after He signs the NDA, I can tell him what the Business concept is, and He can decide if it's a good enough concept for his Investors. This is intellectual property that needs to be protected, but without the Investors signing the the NDA, I don't feel my IP is protected. Is there a way to protect my IP after He signs it?

Kirk Adams : Hi - my name is XXXXX XXXXX I'm an Intellectual Property litigation attorney. Thanks for using JA! I'll be glad to assist you.
Kirk Adams : In order to protect your concept, each of these other angel investors would have to sign an NDA in order to protect your concept.
Kirk Adams : In fact, if this agent signs the agreement and then discloses the concept to others (including these potential investors), it's likely that he is in breach of the NDA - - so he'd be exposing himself to legal liability.
Kirk Adams : Thus, this would not work on two levels:
Kirk Adams : (1) The NDA would not protect you against these angel investors;
Kirk Adams : (2) The NDA would expose the agent for these investors to liability if he discloses your concept to someone else.
Roger and 2 other Intellectual Property Law Specialists are ready to help you
Customer: replied 3 years ago.

Hi Kirk,


 


On the intellectual property question, the investors (group) say they won't sign an NDA because they get to many proposals to have time to sign an NDA for each and every one. They say they have a reputation that I should rely on to not to disclose my IP, and to tell them what my idea (IP) is without an NDA. They also want 10X the investment amount for the redemption option. Does this sound normal to you?

No, it doesn't sound normal. IF they're not willing to sign a non-disclosure agreement, that should be cause for concern. Their reputation doesn't give you the legal right to sue in the event that they don't keep your product and information confidential.
Customer: replied 3 years ago.

Thank you, Kirk, and sorry for bothering you on a Sunday. So I guess I'm stuck in not knowing if I can trust them, and insulting them by insisting on an NDA. It sounds like they feel they are above signing NDA's in place of trusting their professionalism. I don't want to alienate myself by pissing them off, so what can I do?

You're in a very tough predicament, but it truly shocks me that they'd make a fuss about something that is standard in the industry. I could never advise a client to present a product/ idea to someone without an executed NDA.

I can't tell you what to do, but I couldn't advise a client to proceed in this circumstance. Maybe you can communicate back with them and see if a compromise can be reached. Maybe you can ask them to use their own NDA instead of talking yours, etc.
Customer: replied 3 years ago.

Thank you again, Kirk, that is good idea to ask them to compromise by using their own NDA. It's interesting that maybe they are watching too much Shark Tank. I read their submittal form for being a contestant on the shoe, and nowhere is an NDA form required, and they say everything is at your own risk. But I guess it would be a public relations nightmare for the Sharks to go behind the backs of the presenters, so everything is out in the open. If this project of mine gets funded somehow, I know I'm going to have a need for your expertise again. Thanks. Joe

No problem, Joe. Glad to help.

Let me know if you need something further.
Customer: replied 3 years ago.

Oh, I forgot to find out if you think 10X the investment amount they want in return is way high, or somewhere in the normal range. I thought that 3X the investment amount was normal. They don't know how much I'm asking for yet, but that should be negotiable right? I'm asking for $1M in exchange for 30%.

Yes, that's on the high side as well. 3-5 is what I see in my practice.

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