An improperly created website can breed lawsuits. It's not the place to test the limits of the law. Once you put information out on the Net, it's there for anybody to see. It's the ultimate in unrestricted access. You might create a site for potential customers, but your competitors and enemies get to see it too. A cautious and conservative approach is the way to go. How cautious you need to be will vary depending on several things. The preventive medicine is a legal audit of your web site.
As with almost everything with the Net, the precise legal standards for web sites aren't easy to define as the law is in its infancy. The global availability of the Net and all the differing legal systems throughout the world has exacerbated the problem of establishing the applicable legal standard. To some extent, you need to be concerned about the laws of every jurisdiction in this country and throughout the world. Complete compliance with every variation of the law through out the world is an obviously impossible goal. How you cope with this fact depends on what you do and where you do it.
you can get through the early stages of a negotiation with a demonstration of what it can do without revealing how it does it. Of course, if what it does is as much a secret as how it does it, then my generalization may not be true for you.
My recommendation is usually that preliminary discussions proceed without any agreement in place. After all, why would you want to share secrets with people until you have reason to believe that there's a real possibility that both sides are serious about the deal. Until then, the verbal understanding should be that the parties won't share confidential information.
If and when the deal is getting serious, that's the time to impose a confidentiality obligation on the parties. Remember that most confidentiality agreements have reciprocal obligations. Therefore, in trying to tie their hands with your information, you may unintentionally find yourself restrained from pursuing a direction you want to go be cause you may be accused of breaching a confidentiality agreement.