This was 2 friends working on a project together. This is now 3 entities doing business together. So get to business. Your work may have been pro-bono, but there’s money involved now.

Talk to your friend about what his intentions are for you, with respect to the future of the project, while he still has a majority say in the matter. He may have every good intention, and still forget to consider you while he’s caught up in the excitement of making his business deal, between his company and his investor(s).

Get paid or Open Source the code

Any time a ‘business interest’ decides to establish legal restrictions I would absolutely make them pay for that privilege. A NDA is basically a gag order that prevents you from sharing internal information pertaining to their company/project. Basically, if you talk about information private to their company they have the right to sue.

It’s insurance for them but if they decide to lock the code you wrote into a proprietary licensing scheme there’s nothing you can do about it as talking about the internal details would be violating the NDA.

If you don’t already have the code covered under a license, you could try to release it under a permissive license (ex MIT) that will guarantee your right to continue using the code you wrote in the future.

The only problem with retroactively applying a license to existing code is, every contributor needs to agree to the license terms as their individual contributions have an implicit copyright to the developer who wrote them.

Worst Case (they win, you lose):

Your friend jumps onboard, they use your code, and lock it down under a proprietary licensing scheme.

They can legally prevent you from using the code you wrote on future projects, unless you lawyer up and come up with sufficient proof that they are using your code without permission (ie violating your personal copyright).

Either way, if they go with a proprietary licensing scheme you should be compensated for your efforts.

Good Case (they lose, you win):

You setup terms for compensation for the code. Basically, they purchase rights to use the code you wrote without restrictions. At that point a NDA doesn’t matter because you lose rights to build on the code anyway. Just don’t share any of their internal information publicly or you put yourself at risk of being sued.

Best Case (win, win):

You release the project under a MIT license so anything written up until now is free for everybody to use and build on (including for commercial purposes). It guarantees that you can still build onto the code in the future regardless of what they use it for. A NDA still doesn’t matter as long as you respect the terms. If they want to go in a proprietary direction, they’re welcome to fork the main codebase.

There’s a good chance that they’re just trying to protect their interests. There’s nothing wrong with that but be careful not to give them the legal right to screw you in the future if they choose to go down a path you don’t agree with.

Even software that you write pro bono still isn’t free until you setup a license that guarantees future usage. Sweat equity (ie effort) is always holds value and as long as it can be used to generate profits, there will always be somebody looking to gain ownership over the rights to use.

Some terms may depend on where your live too. Intellectual property rights are a messy business.

Disclaimer: IANAL (I Am Not A Lawyer).

Recap: Your friend brought you in, and, as a friend, asked you not to talk about the project. You agreed. Your friend is now talking to an investor, which means that there are potentially Big Bucks involved. The investor wants to bind and gag you, legally.

There is a basic concept in contract law known as “quid pro quo”. In everyday language, this may be translated as “What’s in it for me?” Whenever you are asked to sign some piece of legal paper, if the answer to that question is not BOTH immediately apparent AND to your basic liking, DON’T SIGN IT!

In this case, your “consideration” under the NDA, meaning “what’s in it for you”, does not appear to be well-defined. As such, your reply to their request is eminently reasonable.

In the future, the easy out is “My attorney has strongly advised that I never sign anything without running it past him first, and he’s never given me bad advice. Let me go over this with him (or her) and get back to you.” Then watch their reaction. If they have any problem at all with letting your attorney review their NDA, the old Monty Pyton line becomes applicable: “RUN AWAY! RUN AWAY!”

Your never compelled to sign any sort of contract, and, if you do sign something when not of a sound mind, or under some sort of duress, then whatever you signed could (and should) be deemed as null and void.

Having said that, your request in my opinion is unreasonable. An NDA or NCNDA is about the most rudimentary piece of paper. You shouldn’t be afraid of it, unless, of course you plan on disclosing information that the other party doesn’t want you to disclose. At this point there is no guarantee of success in negotiation, only the terms and conditions prior to discussion.

If anything, since you aren’t an employee, and not bound by the terms and conditions of an employment contact, its even MORE grounds for you to be requested to sign an NDA.

However, should your friend receive financial benefit as a clear result of your contribution, via the investor injecting funds, you should perhaps review things with your friend and steer things away from a ‘Pro-Bono’ type arrangement, in lieu of your professional services rendered.

ANAL – Am Not A Lawyer. 😉