Create, Consult, Control
News & commentary on intellectual property issues.
Dec082009 | Steve O'Donnell
Using a non-disclosure agreement to protect your ideas
Non-disclosure agreements are contracts between parties that need to share certain secret information in order to do business together. An NDA solemnizes a confidential relationship and protects the party sharing their secrets.
The content of an NDA is fairly standard; it defines what information is to be kept secret, what exclusions might exist and what the receiving party needs to do to keep the secrets. Exclusions allow the receiving party to forgo the NDA in cases when the information becomes publicly known or if it was already known. For example, if I get a company to sign an NDA and the secret I share is something they’ve already been working on, the NDA won’t prevent them from cutting me out when they take the item to market.
Obviously, if you are an inventor you will want an NDA in place before you share your invention with manufacturing partners or investors. Whether or not they will is another issue.
By asking someone to sign an NDA you are requesting them to accept a heavy obligation before finding out if your idea is any good or if it’s something they’d even be interested in. Not many investors are willing to sign your NDA without having a good idea of what you have. On the other hand, if you need to have your invention manufactured for testing, the machinist is more likely to sign an NDA to get the job.
Often, to get your foot in the door, you need to either have a track record of marketable ideas or share a trusted intermediary that can set up a meeting. More often than not, that isn’t the case. To coax investors to listen to my clients, I draft a non-confidential disclosure, discussing the invention or idea, without giving away any secrets. If there is a bite, then we know the other side is interested in the technology and likely willing to sign an NDA to learn more.
Ignoring the possibility of having your idea stolen, discussing your invention before starting the patenting process and without an NDA may likely be considered a public use by the patent office and could prevent you from ever obtaining a patent.
The safest thing that you can do to protect your idea is to talk to an intellectual property attorney before you talk to potential investors or partners.
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