The NDA Bull Market

We now believe that the market for Non Disclosure Agreements will rise by 7.8% in 2009 to an estimated $7.97 billion in Full Time Work Hour Equivalents (FTWHE). The NDA market has been one of the best performing technology markets for decades and as a result of a number of recent innovations as well as globalization of the NDA, we believe that the quantity of FTWHE chewed up by NDAs will continue to rise at above average rates for the foreseeable future.

The oldest known NDA was written by John the Elder on a deer skin in 1216 as a means to avoid taxation in Banffshire, England. It failed. Word had reached John regarding the Magna Carta and in a flash he deduced that taxation was a form of involuntary disclosure. Using that remarkable historical document as inspiration he wrote the first voluntary disclosure agreement. John the Elder’s strategy was to convince the sovereign authority to recognize the “right” of voluntary disclosure for tax purposes. And once that was accomplished, refuse to volunteer any information. Mr. Elder wasn’t a particularly bright man nor was he, when he died, a particularly elderly man. 

The first paper form of a voluntary disclosure agreement didn’t surface until 1674 when Jason Saberattle of Moray, England, sought to include it in an exclusive distribution proposal for the white candy cane (stripes were invented 250 years later) from Christian Andersson―a Norwegian transplant to England.  Saberattle stated in his agreement that he was seeking a “monopoly.” He did convince Andersson to sign the novel, one-way document in exchange for two heads of cattle, a mattress and three flagons of ale. But when Mr. Saberattle attempted use the document to raise funds for his “candy cane” venture, he was met with almost a total lack of understanding of the power of the NDA. By 1675 the candy cane was on its way to being a staple Christmas confectionary throughout Europe and the colonies with thousands of producers. No copy of Mr. Saberattle’s innovative NDA exists today.

For the next 300 years, the NDA remained a little understood concept, particularly with the sovereign authorities in most countries of Europe and the Americas. Most lawyers focused on the more lucrative “letters patent” work, which paid better and which was generally supported by the courts of the sovereign authority.

The First Major NDA Breakthrough

Most lawyers probably wonder why Winslow Day is a semi-official legal holiday and is noted almost exclusively by members of the bar. It is because of the amazing innovation developed by a John Fitch Winslow of Boston, Massachusetts, in 1908. As students of legal history know, Mr. Winslow invented the first two-sided NDA.

That major breakthrough resurrected the moribund NDA concept and set it on the path to become, as it is today, the bread and butter of most legal bills in the United States.

Prior to Mr. Winslow, those rare attempts at drafting an NDA were based on the one-sided monopoly concept originated by Mr. Saberattle in 1674. The two-sided agreement opened up the entire NDA market. Lawyers were now able to present clients with strong arguments in favor of two-sided protection which, in an era when attorneys were paid by the word ($1 per word, for example), created a lucrative new line of business. Soon lawyers were recommending that every corporate client have an NDA written, negotiated and signed before business discussions ensued. Legal bills tripled, even quadrupled (since legal drafting never increases algebraically, only geometrically). 

Hence the now ubiquitous phrase, “to Winslow a client.” 

On April 10, 1925, the first U.S. two-sided NDA agreement was tested in court. The Winslow-drafted document won. (What happened to the parties in the case is unknown.)

The following table summarizes the range of NDA innovations since Winslow:

It may be hard to imagine that the NDA could ever be improved upon. After all, since Winslow the basic structure of the modern NDA has been laid out. Yet, as we’ve seen, innovation in legalese will not be denied. Two years ago, the advent of a truly global NDA created new opportunities for legal scribes in vast, virgin legal markets throughout the world.

With globalization and a series of new innovations the NDA market, we expect, will grow to over $10 billion in annual billings by 2015.

While some critics would argue that NDAs often don’t fit the intended technology use, that they create unforeseen liabilities, that they are difficult to enforce, that it is difficult for the parties to determine what exactly is and is not covered, that there is no ability to monitor either the discloser or the disclosee, and that multiple and conflicting state laws exist regarding NDA enforceability, we believe the atmosphere around the world is still decidedly pro-NDA. No longer is the NDA seen as simply a business need; it now also is seen as essential protection and therefore has elevated the role of corporate counsel from advisor to deal mediator. The modern NDA has played a decidedly non-trivial role in increasing the complexity of technology, invention, discovery, and business expansion in the United States and, soon, the world. 

No doubt about it. The bulls are running in the NDA market.

(Publisher’s Note:  In case any of our readers are confused by the conventions employed in this article, this is fictional satire and the names and events described herein are a figment of the writer’s imagination.)