Non Disclosure Agreements
Client’s frequently call wanting to know how they can disclose the invention to a prototype maker, a manufacturer, an investor or a potential buyer without them stealing their idea.
I usually suggest using a non-disclosure agreement, often called and NDA, to protect the confidentiality of their idea. A nondisclosure agreement is actually a contract between one party such as the inventor who has the information and another party called the recipient that wants to receive the information. The main purpose of the Non-disclosure agreement is to ensure that the information remains secret and is not stolen.
Often, the receiving party, which may be a company or an investor will provide a Non-disclosure for you to sign and you’re wondering if you’re properly protected.
In reviewing an NDA, there are five important elements to consider.
The first is the definition of confidential information. Ideally, the NDA sets forth the scope of information covered, without actually disclosing the secrets.
The second element is identifying what information is not required to be protect held confidential by the receiving party. Usually, this is information that the recipient already knew, or becomes publicly known or is independently developed.
The third element is the obligation of the receiving party to maintain the information in confidence and limit its use. This might include who in the company has access to the information.
The fourth is period of time, generally between 1-5 years, that the recipient has to hold the information confidential.
The fifth element is the miscellaneous conditions generally included at the end of every NDA. For example, these could include which state’s law will apply in the event the agreement is breached, and a requirement that potential disputes be arbitrated.
As you can see, a non-disclosure agreement can be fairly complex and requires skill and experience in its preparation and negotiation. The best advice is to have a Patent Attorney handle preparing and negotiating your NDA.
We have over 35 years of experience in crafting and negotiating the terms of NDAs.
Contact your Patent Attorney to learn more.
