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Contracts

Development Agreement

California

Asked on Jan 17, 2022

Are these clauses safe to sign into in an NDA?

A company approached me to help them develop a prototype of a software application, so they can secure a round of funding. To this end, they gave me an NDA to sign, after which they would divulge their design artifacts for my review. Good so far. But the NDA has these terms which I am concerned about: Intellectual property: At any point during and/or as a direct result of the signing of this Agreement when you create something for the purpose of fulfilling work for (co), said creation is considered work-made-for-hire and is owned by (co). This includes copyrightable material, trademarks, patents (a whole list), whether developed by you alone of in collaboration with anyone else (I am alone). The company owns everything. I got it. Now coming to another point: Indemnification Provision: if (co) of a (co) partner gets sued as a result of your work, you agree to step in and pay for all relevant costs, unless (co) has expressly instructed you in writing that you carry out the task for which (co) or its partner was sued While I would never knowingly carry out something illegal or attract lawsuit, as an individual I have limited knowledge. And besides, I feel this will leave me personally open to legal liability for indefinite period of time, even if someone else takes my code in continues development on it later Are my concerns legit? How should this be altered (if it should) so it is fair to me (if this is unfair)?

1 Attorney answer

Answer

Contracts

California

Answered 220 days ago

Cameron S.

ContractsCounsel verified

Business Lawyer
Licensed in California
Free Consultation

These are not appropriate provisions for an NDA. An NDA should only cover the disclosure of confidential information - not development and assignment of intellectual property. You should not be transfering ownership of IP (or anything you develop) under an NDA. It should also not include an indemnification provision. Both of these clauses are appropriate for a development agreement or a professional services agreement. Putting this aside, if this were a development/professional services agreement, then you probably would want to protect any background technology or pre-existing works that you already own prior to the agreement (and would license the (co) rights to this background technology if necessary). And, you should not be indemnifying unless you intentionally used third party materials or knowingly stole another party's work to complete the development for (co). This is because it is not feasible for you to know what trademarks or patents are out in the world. If what you develop infringes, that should not be your responsibility/risk. You probably aren't getting paid enough to take on that risk. Copyright requires knowing that you stole copyrightable material, so the knowledge qualifier described above means that the (co) is protected under the indemnification for copyright infringement issues caused by you.

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