Protecting Confidential Product Information

Whether an inventor is going for a patent, a trademark, a copyright or seeking to keep a trade secret, confidentiality is paramount to success.  A crucial element of trade secrets is that they are not generally known to the public.  Additionally, the business holding the trade secret must make a reasonable effort to maintain the confidentiality and secrecy of the information.  While the process to getting an invention licensed or patented can often be a very expensive endeavor, it is critical that confidentiality be maintained during the entire process.  To protect the intellectual property of the product being patented or licensed, it is strongly recommended that individuals utilize non-disclosure agreements and confidentiality agreements before discussing their invention with any third party.

Confidential Information In Nondisclosure Agreements

Non-disclosure agreements (“NDA’s”) or are generally signed by employees or a business who are privy to the secrets of the company.  The NDA requires that the information shared be kept strictly confidential.  A non-disclosure agreement stipulates that the employee is prohibited from taking confidential information and sharing it with the public or another business enterprise.  The NDA acts to bind the employee to keep confidential information secret in order to protect the intellectual property and to avoid public disclosure.  Violations of NDA’s allow the company to pursue legal action against an employee who leaks confidential information in breach of the NDA, and usually leads to heavy penalties and damages for the company.

Proceeding Without A Nondisclosure Agreement

Proceeding without a non-disclosure agreement is an extremely risky practice and can jeopardize the ability of an inventor to get a patent, or for a business to maintain their trade secrets.  In order to protect the intellectual property of the product being patented or licensed, it is strongly recommended that individuals utilize non-disclosure agreements and confidentiality agreements before discussing their invention with any third party.  Proceeding without a non-disclosure agreement is never a good idea, and inventors and businesses alike are urged to have a confidentiality agreement in place before any product details are revealed.

Waiver Agreements

Waiver agreements include provisions in licensing agreements that limit the liability of the parties to the contract.  Waiver agreements can include anything that the parties decide to contract and negotiation, but the agreement itself must explicitly state the rights being waived.  Waiver agreements may also be terminable at a specific date, such as waivers that cover a set amount of time (i.e. 6 or 12 months).  In indemnification agreements, the licensee often waives their right to seek damages against the licensor in addition to the allowable damages stipulated in the licensing agreement.  If the right to seek additional damages is expressly waived, the licensee has the sole remedy of the allowable damages in the contract.

Who To Disclose To

Employees

Businesses seeking a patent or protecting trade secrets almost always have to disclose confidential information to their employees as a matter of business.  In all employment scenarios, employers should have employees sign non-disclosure or confidentiality agreements to protect the intellectual property of the employer.  Non-compete agreements may also be signed by an employee who is privy to confidential information of a company.  A non-compete stipulates that the employee is prohibited from taking the confidential information and leaving the company to form a competing business enterprise using the confidential information.

Contractors

There are many contractors that may be hired to help an inventor more forward in the patent and trademark process, and with each contractor, confidentiality considerations are important.  In most cases, it is essential for the contractor to understand the product in order to help the inventor reach the desired outcome.  Withholding necessary information will only frustrate the process and prevent the inventor from getting the assistance necessary to proceed with the patent.  An example of a contractor relationship where disclosure is an issue is when an inventor seeks the services of a fabricator to create a prototype for the invention.  While contractors can be very helpful, they should always sign a non-disclosure agreement so that the intellectual property being shared is protected.

Attorneys

Once retained or hired, attorneys are bound by attorney-client privilege, which extends to all disclosure made about an invention.  Attorneys are implicitly prohibited from disclosing information about privileged conversations and knowledge acquired as a result of a privileged relationship.  When in doubt over who to disclose information to or who to go to for guidance, an attorney is usually the best option because they are bound to confidentiality as a matter of law.

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