NDAs for Tech Companies: What Software and SaaS Businesses Need to Watch Out For

Many technology businesses rely on non-disclosure agreements (NDAs) when discussing new products, software platforms, AI tools, investment opportunities, partnerships, or development projects.

NDAs are valuable tools, but only if they are properly tailored to the information and risks the business is trying to protect. For tech companies, that often means looking beyond standard confidentiality wording and making sure the agreement properly covers the business’s IP, technical know-how, product information and commercial data. If the drafting is too generic, too broad, or does not reflect what is actually being disclosed, the business may be left with a document that looks reassuring on paper but is difficult to rely on in practice.

An NDA isn’t one-size-fits-all — it will depend on the relationship, the information being shared and how the recipient is permitted to use it. For example, an investor pitch may require careful restrictions on use of the information, while a developer or consultant engagement may need to sit alongside a separate agreement dealing with IP ownership and deliverables.

When Do Tech Businesses Need an NDA?

A technology business may want an NDA when:

• Demonstrating a new software platform to a prospective customer
• Discussing a collaboration or joint venture
• Sharing product roadmaps with potential partners
• Engaging freelance developers or consultants
• Exploring investment opportunities
• Discussing a potential acquisition
• Sharing technical specifications or architecture
• Conducting R&D projects

What Information Should Actually Be Protected?

Many businesses simply define confidential information as “all information shared”. That may feel protective, if the definition is too broad or unclear it can create problems if the NDA is challenged.

Technology businesses should carefully identify the categories of information that actually need protecting, such as:

• Source code
• Product roadmaps
• Algorithms
• AI models and training methods
• Technical documentation
• Pricing models
• Customer lists
• Product development plans
• Commercial strategies
• Financial information

The more valuable or unique the information, the more care is needed in how it is described. The NDA should identify the categories of information to be protected with enough specificity to be meaningful, without requiring the business to disclose the underlying idea, invention or technical detail before the agreement is signed. It should also include sensible exceptions for information that is already public, independently developed, or lawfully received from a third party. This helps keep the definition practical, proportionate and enforceable.

The Common NDA Mistake: Confusing Confidentiality with IP Ownership

An NDA can protect confidential information, restrict how it is used and make clear that disclosure does not transfer any existing IP rights. It is not, however, a substitute for a proper IP agreement dealing with ownership provisions where code, designs, documentation or other materials are being created.

This matters because UK law does not generally protect a bare idea as property. Protection usually comes from the confidential information shared, the contractual restrictions agreed and, where materials or outputs are created, and a clear written agreement dealing with ownership of those outputs.

One-Way vs Mutual NDAs

Businesses often sign NDAs without first considering whether the agreement should be one-way or mutual.

One-Way NDA

A one-way NDA is used where only one party is disclosing confidential information.

Examples:

• pitching software or a product concept to investors;
• sharing sensitive technical information with a consultant.

Mutual NDA

A mutual NDA is used where both parties are exchanging confidential information.

Examples:

• technology partnerships;
• joint development discussions; or
• wider collaboration arrangements.

What Happens If the Other Side Breaches the NDA?

Many businesses focus on getting the document signed but never think about what enforcement may actually look like.

Prevention is always easier than enforcement, so businesses should think about controlling access to information in the first place, including  clauses dealing with access provided to only those who ‘need to know’ within a business.

It’s also worth building in a clause that sets out the remedies available on breach – injunctive relief, liquidated damages, or indemnification, along with a dispute resolution mechanism. This can streamline enforcement considerably and reduce the cost and disruption of formal litigation.

Why NDAs Matter for Investment and Due Diligence

Investors often place significant value on a technology company’s intellectual property. If:

• Source code has been widely shared
• Confidential information has not been properly protected
• Contractors have not signed appropriate agreements

questions may well be raised during due diligence.

Well-managed confidentiality processes demonstrate that a business takes its intellectual property seriously, and that starts with good record-keeping. Businesses should keep a record of every NDA signed, along with a log of what information was disclosed and to whom. This can be critical during due diligence, evidencing that confidentiality obligations have been consistently identified and enforced rather than treated as a box-ticking exercise.

NDAs and AI: A New Risk for Tech Businesses

Many businesses are now using AI tools as part of their daily operations, and this creates a newer category of risk that older NDAs were never drafted to cover.

Questions worth asking include:

• Are employees uploading confidential information into AI platforms?
• Are customer details being entered into generative AI tools?
• What happens to proprietary information once it’s been entered into an AI system?
• Do existing NDAs adequately cover AI-related disclosures?

For many technology companies, internal AI usage policies are now just as important as the external NDAs themselves.

Get in Touch

Whether you’re developing software, exploring a collaboration, seeking investment, or sharing commercially sensitive information, our commercial and IP solicitors can help you put the right confidentiality arrangements in place and ensure your valuable intellectual property is properly protected.