The Worth(lessness) of NDAs

It’s been almost two weeks since we opened up the submission process and the response has been fantastic, if somewhat overwhelming.  We’ve gotten over 70 applications so far and we’re working through them as best we can.  Please be patient with us… we will get back to you.

One thing that has come up a couple of times is a request to sign an NDA, and that’s actually the focus of this post.  We do not sign NDAs and would like to share the rationale behind this decision.

Fundamentally, NDAs don’t make sense in the context of smaller games (call them casual, indie, whatever).  Here’s why:

Enforcement – In order for an NDA to be worth anything more than the paper it’s printed on, a developer has to be willing to enforce it, and capable of enforcing it.  That means retaining lawyers and investing significant amounts of money, time, and emotional energy. Even if a developer actually chooses to invest their time and energy in enforcing an NDA (at the expense of actually making games), they are unlikely to have the financial means to do so, or they wouldn’t be seeking funding in the first place. For deals worth millions of dollars, NDAs make sense because enforcing them in court could result in huge payouts.  For deals worth $100k the risk/reward ratio means a legal battle is a terrible bet.

Ideas and Execution – Great games  are great because they were well made, not just because they were based on a good idea. Shadow of the Colossus, Portal, GTA,  [insert your favorite games of all time here] would not have been great without the super talented teams and visionaries that made them.  If a developer relies on their idea rather than their ability to execute it well, in the vast majority of cases they’re already in deep trouble.  Ideas are a dime a dozen, everybody has game ideas that have the potential to become great games, but it’s the execution that matters, and an NDA can protect only ideas, it doesn’t protect a against someone making a better game.

Trust and Instinct – If you feel uneasy about sharing your ideas with a potential investor/colleague/acquaintance/whoever, that should serve as a warning to you.  Stay away from people you mistrust. Millions of years of evolution have trained your brain to recognize what’s good and bad for your survival, so trust your instincts.  If someone’s out to screw you, they’ll screw you with or without an NDA.

In short, don’t waste your time building straw houses, just stay away from wolves.

  • Jake

    I have always felt the same way about NDAs and ideas. Glad to see that reinforced.

    Are you guys planning to use this blog as a medium for spreading good practices like this for indie game developers? Or is it only when it has something to do directly with Indie Fund that these kinds of topics will be brought up?

    • http://2dboy.com ron

      we've discussed the idea of taking questions from developers (about business, legal, promotion, etc) and periodically posting questions and answers on the blog, either answering them ourselves, of by finding someone else who could answer them better than we can. is that something people would like to see?

      • Jake

        Yes!

      • Robert-Glen

        I would be very interested in it.

        I didn't expect much from the blog once submissions became open and knowing all parties involved are busy doing their own things but I find myself checking it often just for any advice.

      • http://www.gamasutra.com/blogs/AdamBishop/310/ A_bishop13

        I'd love to see that. It's easy to find information about the design/programming/art side of the business, but useful information about the business side of the business is often quite difficult to come by.

      • http://psychochild.org/ Brian 'Psychochild' Green

        If I might pimp my own work, I helped write a book about business and legal issues in game development. It's a few years old now, so it's not entirely up-to-date, but it's still a pretty good primer, if I might say so. You can find more info at: http://psychochild.org/?p=223

        On that note, I'd be happy to contribute to answering questions about the business side of things. Feel free to reach me.

  • Erico

    The art is ACE but, no signature?

  • http://www.unwesen.de/ unwesen

    Your arguments make sense on the face of it, but I think you're looking at NDAs the wrong way.

    It's probably true that your business partners can't enforce NDAs they ask you to sign, but that shouldn't put you off signing them. On the contrary; if the risk is low for you, there's no good reason not to sign something. It's good that you advise your business partners that the NDAs they want you to sign are likely worthless, but there's a world of difference between that and refusing to sign them.

    Additionally, NDAs are dirt cheap to set up. Anyone can google examples; a sheet of paper or three doesn't cost much, and signatures are easy enough to draw.

    That leaves the trust issue… well, contracts of any sorts should always reflect what you intend to do anyway. If a contract imposes terms on you that make you feel uncomfortable, don't sign it. That begs the question, what is it that makes you feel uncomfortable with NDAs? Do you find it that hard keeping your business partners' ideas confidential?

    Don't get me wrong, I understand your views. I actually share them to an extent. But if you want to build a business relationship and the NDA issue comes up, there's really no good reason to refuse and risk alienating your potential business partner in the process.

    • http://www.rocketbeargames.com Alex Vostrov

      If I were running a fund, I wouldn't sign NDAs. This is not that unusual. FYI, venture capitalists don't sign NDAs either when you pitch to them.

      Why? They look at too many friggin ideas to sort out what came from where. Add to that the fact that you're less original than you think and NDA are just too much bother.

      • http://www.unwesen.de/ unwesen

        Well, VCs don't usually sign NDAs when you pitch to them, but they might well do later on in the process. If people ask for NDAs before submitting their ideas here, then they should rethink that strategy, absolutely.

        That aside, this isn't VCs we're talking about. This is NDAs applied to requesting funding for indie games from this particular organisation. What other VCs do in general really doesn't need to apply: if indie developers don't want to pitch to regular VCs, then there must be reasons for them to want to be treated differently when coming here. If they do pitch to regular VCs, they've either had NDAs signed or good reasons to ask for it, I'd assume…

    • http://2dboy.com ron

      we see no value in signing an NDA, not for us and not for a developer and we'd rather spend time working on our games (remember, we're all full time indies) than reviewing legal documents that serve no purpose. if that alienates a few people here and there, that's unfortunate, but we're ok with it.

    • Jake

      There's also the possibility that perhaps they don't want to fund the kind of developers who feel they have to rely on NDAs or other intellectual property gimmicks in order to make and sell a good game.

  • http://twitter.com/speed_dreamers Speed Dreamers

    IMO, this post makes a very good point. Totally agree! I'll add that better than asking for a NDA, protect your work by making a proof of creation (send/email it to yourself, an archiving association or post it on the internet – yes, having it on someone else's server is proof). If you feel you have a case, you have 10 years to sue under international copyright law (although I know in the US it's a bit different than everywhere else in the world). Got the info from a copyright lawyer.

  • http://twitter.com/speed_dreamers Speed Dreamers

    IMO, this post makes a very good point. Totally agree! I'll add that better than asking for a NDA, protect your work by making a proof of creation (send/email it to yourself, an archiving association or post it on the internet – yes, having it on someone else's server is proof). If you feel you have a case, you have 10 years to sue under international copyright law (although I know in the US it's a bit different than everywhere else in the world). Got the info from a copyright lawyer.

  • ZuperZ_Games

    OK… But I Still Want to Know which Program should I use…

    I Know a lot of Game Maker, and Kinda of Adobe Flash…. At the End, the Final Application Ends as a .exe

    • Radix

      Depending on what your objectives are there are different answers to this.
      As a designer and not a coder who just wants to get your idea out there, I recommend taking the path of least resistance. Which could be using an authoring tool, or teaming up with a coder who can advise you on his preferences.
      If you're planning on releasing a polished commercial product, you'll need to have coding talent on your team and have at least a rough idea in mind of what you want the final thing to be, which platform you're targeting, and try to make an informed decision from there.

      • ZuperZ_Games

        Well, I'm a Good Designer, and I'm a Coder Too… I Can't Team Up with ANYONE where I Live (Mexico) cuz' ANYONE Knows Coding or Designing… And the Only one I Know that is a Good Designer, doesn't Make the Things a Ask very Well… So I Prefer to make the Design, by myself…

        Anyhow, this doesn't Answer my Question… But Thanks… ;D

        • WW

          if you're planning on developing your idea on your own, then use the tools you're best with. if you're developing in a team, use the tools that the team are best with (maybe its the same thing).

          i dont think the fund will have any specific requirement other than the final product being able to be published (released to the public in some way) and making money (at least that which was invested at the start).

  • topagae

    NDA's are tricky business, and ridiculous to enforce. They're sadly not much protection to anyone who doesn't already have the means to protect themselves. My advice to people paranoid about their work is to be careful who you tell. I've seen more then one indie rant about NDA's and how angel investors wouldn't sign them, and then tell complete strangers at parties about their awesome game ideas at GDC.

  • bateleur

    Personally I think NDAs are a very good idea despite agreeing with all three points above.

    They're not there to be enforced. They're there precisely because you DO trust the people you're working with. They're a way to be absolutely clear about which parts of your project are not to be discussed in public contexts without your consent. This is useful, because different people may have different ideas about which sorts of IP have value in this way.

    Lastly, you don't need to believe that NDAs are good to sign one. You need to believe they're harmful in order to refuse to sign one.

    • http://2dboy.com ron

      they're harmful in that they take time to review yet provide no value in return, to either side. also, i can think of 100 things i won't do even though they're not harmful, i just have better things to do with my time :)

    • Jz

      Yeah, I have to agree with you bateleur. NDA's are a good way of protecting your IP's as well, in the case one of your ideas is new, it's good to have it notated that both parties understanding. I also agree with the ideas represented in the original writeup…but personally if I am handing off my original designs and art, there would have to be an NDA in place :)

  • Thomas Mahler

    Development should be much more open than it is now anyway :)

  • http://www.gameproducer.net Juuso

    All this talk confirms me that you have set up indie fund just (1) because you have no more game ideas and (2) want to rip us off! Darn you investors, darn you!

    :P

    (kidding here)

  • Xerron

    I agree. NDA's are designed for those who have invested millions into their projects. It's a nice piece of protection to have, but if you are relatively unknown, as most indies are, NDA's aren't really too helpful.

  • http://pulse.yahoo.com/_DITHIG7CQFFCW5H75V67OVXHKI Sic'em

    I use an NDA with people that I might contract with that work with me, it's a simple one page legal document. Could I/would I enforce it if they broke it? No.

    But, the idea is to let them know that their reputation and trust is on the line. The community isn't 'that' big yet, start screwing over Indie developers and it probably wouldn't be long till you where flipping burgers.

    As far as 'protecting' my ideas, I don't even bother. We released our idea to the public while still working on the prototype. Indie success is built off of community, word of mouth and the quality of which you bring your idea to life – not the idea itself.

    I've seen TONS of good idea's ruined, I've actually seen bad idea (or so I thought when hearing it) turn out to make awesome games. If someone wants to steal my 'base' idea and remake a game off it… I hope it rocks cause I'm going to play it!

  • Guest

    Any progress reports? Been almost a month =3

  • http://spyparty.com Chris Hecker

    The fourth point about why NDAs are stupid for indies is that you should be trying to do as much grass roots marketing and PR as you possibly can, so if your game is secret by the time you go to Indie Fund, you're already screwing up. _ALL_ of the “AAA Indie” releases in the past few years have had long term grass roots marketing campaigns, sometimes from before the games had names (cf. Battleblock Theater). Plus, if your game is well-knonwn my guess (without knowing for sure) is you'd be more likely to get money from Indie Fund because they can see that you know what you're doing in terms of marketing and PR.

  • ndchristie

    There are two important reasons for an NDA, clarity and recordskeeping.

    Clarity makes sure that no matter who you're working with, and there's a wide range of professionals and total jokers, they know exactly what is meant to be talked about and more importantly what isn't.

    Recordskeeping means that you don't need lawyers or trials to enforce anything. When you have a paper someone's signed and can point out exactly what went wrong, you can fire them on clear terms.
    More importantly, if there was a very serious transgression that damaged your group/company, you have the NDA and the material which you use to blacklist that person on all available channels, to ensure that assholes stay out of the industry and that nobody else will have to deal with that kind of behavior. It's not about getting back what you lost, it's about keeping the streets clean for everyone else.

  • http://profile.yahoo.com/ZUO433CQ3GEK4NNK4HOJN4A2CQ Jeffy

    I agree that NDA’s suck, especially for indie games.  Most games, even well-made games end up being commercial failures.  Adding a layer of secrecy doesn’t protect the game from being copied, it just prevents the developers themselves from creating as much free buzz about the game as they could.   As an Indie game dev, you have zero dollars going to marketing and zero dollars going to your marketing team (since they don’t exist).  An NDA just tries to gaurantee that your own devs don’t give you any free marketing.  An NDA might help EA hide it’s newest FIFA soccer game innovation from 2k Sports.   But there’s no point in secrecy for games that don’t even have an established fan base.