Confidentiality Agreements – Why They Are Crucial

Patents and Confidentiality Agreements

There is no greater feeling in the world than coming up with a great invention, especially one that holds the promise of great commercial success.  You want to tell everyone about your invention, and to get friends and relatives to try it out. You may even want to post your invention on the internet or talk about it in front of an audience. Unfortunately, once you do so, you risk losing your patent rights. Worse yet, you may give others the opportunity to copy your invention, or claim some rights to your invention.

My favorite solution is to tell no one about your invention. This worked pretty well for Coca Cola and its famous trade secret recipe, but not so well for most anyone else that has an invention that can be seen or reverse engineered - which is just about everything.

For those that will need to manufacture, market, sell, or finance an invention, disclosure usually cannot be avoided. So…what can you do? There are no easy solutions, but you can do your due diligence to try and prevent loss of your rights.

First, file a patent application prior to disclosure. If you are planning a meeting to discuss your invention, file a patent application prior to the meeting. In such cases, many people run to the patent office and file a patent application to cover their invention. This helps, but the patent application must include key aspects of the invention in order to be effective. In other words: junk in, junk out. To make sure you effectively protect your invention, you will need to prepare good drawings with a good written description.

Second, have everyone you talk to about your invention sign a confidentiality agreement (also known as a non-disclosure agreement). This sounds great in principle, but it is difficult in practice. Here are some typical problems with confidentiality agreements:

PROBLEM #1 – Tailoring the Confidentiality Agreement to Fit Your Situation: 

·      The confidentiality agreement has to fit your situation, or once again, its junk in, junk out. To be sure  you are properly covered, you have to read and understand what the agreement says. Some agreements require that items disclosed be marked, or they will not be confidential. Other agreements may cover confidentiality of one feature of your invention, but not another. Be sure the terms of your confidentiality agreement meet your needs.

 PROBLEM #2 – Managing the Confidentiality Agreement: 

Many times, the agreements are lost, or only partially signed. In some cases, the person signing is not authorized to sign, or the signed agreement does not cover everyone involved. The confidentiality agreements must be properly signed by, or on behalf of, anyone receiving the disclosure. Also, these and other confidential documents should be maintained in a secure location where they won’t get lost.

 PROBLEM #3 – Enforcing the Confidentiality Agreement: 

Those that do sign often do not maintain confidentiality. What can you do to someone that signs your agreement, but then posts your invention on the internet? Let’s just say it’s a big mess that may not be fixable. A common example involves ‘turncoat employees’ that leave the company and get a job with your competitor. If the employee takes your confidential information to the competitor, you can possibly file a trade secret lawsuit against them for violating the agreement. For more protection, you may also have an employment with additional provisions, such as non-compete clauses.

PROBLEM #4 – Addressing Other Issues: 

Confidentiality agreements are intended to address confidentiality of your information. They often do not address the numerous other issues that may arise, such as ownership, inventorship, business arrangements, etc. For example, if you disclose your invention to a friend, your friend may make suggestions to improve your invention. If you ultimately get a patent that mentions these suggestions, your friend may claim that you ‘stole the idea’. Such claims are often made even in cases where you already had the idea first, or you are the one that actually made the idea work. To address these type of issues, you will need to be sure terms are included in your confidentiality agreement. 

While confidentiality agreements may not be a perfect solution, they certainly provide an additional layer of protection that can be used to help prevent the loss of your patent rights. Additionally, they may be expanded to include additional provisions to address other concerns that may arise.

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