What is a non disclosure agreement?

At its simplest, a non disclosure agreement (often abbreviated to an NDA) is a contract in which the parties agree to keep shared information private.

Why is it useful for inventors?

A non disclosure agreement allows inventors to talk about their invention to selected parties (such as investors, prototype makers, invention marketing consultant advisors and potential licensees) while addressing these two issues:

1. Losing patent rights through premature public disclosure

Public discloser of an invention before obtaining a patent application filing date, can lead to a loss of patent rights.
While it is fine to let people know for example that you have invented “a new type of screwdriver”, it’s not fine to let people know just how you designed and developed it.

Although there are a few exceptions to this rule [notably the US and Canada permit a 12 month “patent grace period” between public disclosure and patentability] ... it is still an issue that all inventors in whatever country need to most carefully think-through and address.

And using a nondisclosure agreement is often the best way forward here. Because information shared within the confines of an NDA is considered “private disclosure” (rather than public disclosure), your potential future patent rights are left intact.

2. The danger of having your invention (idea) stolen

The other concern inventors may have re. talking about their invention before having the protection of patent application filing dates - is the risk of the other party “stealing” the invention idea.

If properly worded however, nondisclosure agreements (in principle, but not always in practice as we will see below) allow inventors to disclose details of their invention to a third party without the risk of them stealing it or commercially capitalise on it without permission.

The two main types of non disclosure agreements

Before we go on to look at the good and not so good points of using a non disclosure agreement, there are two types of NDA that you need to understand:

ONE-WAY Non Disclosure Agreements

This type of agreement is suitable when one party (the inventor) is disclosing confidential information to another party. The disclosing is one-way: From the inventor known as the discloser to the the receiving party, known as the disclosee.

This is the type of non disclosure agreement for example that I sign for my private invention marketing telephone coaching clients, because the inventor is the discloser and I am the disclosee.

Here is a simple one page one-way Non Disclosure Agreement Template

MUTUAL Non Disclosure Agreements

This type of non disclosure agreement is used when both parties may want to disclose confidential information to each other. A typical example would be when an inventor and a potential licensee want to seriously discuss and negotiate a patent licensing deal

In this case, not only will the licensee want to know all about the invention, but the inventor may need to obtain commercially sensitive information from the licensee.
This is especially important if the inventor is considering an exclusive patent licensing deal

In this case, the inventor will need to know from the licensee how his or her invention fits the company’s competitive positioning and overall business strategy, the nature, schedule and budget of the invention’s marketing plans as well as realistic sales projections.

Here is a simple one page Mutual Non Disclosure Agreement Template

The good points about a non disclosure agreement

receiving party agrees to keep your invention details confidential
receiving party agrees not to engage in using your invention for own gain
inventor gets input from investors, prototype makers, invention marketing consultant advisors without jeopardising future patent rights

The bad points about a non disclosure agreement

not everyone will sign them (particularly one-way agreements)
gives limited protection - notably only from the party who signs.
can be relatively easy to get around. For example, the other party can say that they already came up with your idea themselves or go on to use it but as part of some other product

The ugly points about a non disclosure agreement

breach of contract can be very difficult to legally prove
and in any event, it can be prohibitively expensive in terms of money, time, emotional capital and financial risk to legally pursue

Not withstanding the above however, it is much more likely that your invention will be ripped-off/copied once it is actually on the market rather than before.

Conclusions
BOTTOM LINE: Using a non disclosure agreement does give a measure of protection..

And most importantly - it enables you to discuss your invention with investors, prototype makers, invention marketing consultants, business advisors and potential licensees with a degree of protection ... without jeopardising your future patent rights.

Would you like Expert Help for YOUR invention?

One-way Non Disclosure Agreement Template

Mutual Non Disclosure Agreement Template

Non Disclosure Agreements

the good, the bad, the ugly

To get PRACTICAL one-to-one coaching for your invention, please check out my private Telephone Coaching Service


	advanced

Search This Site