Imagine that you have developed an invention that could be marketable. What is the next step? You are usually faced with a dilemma. To make money from the invention, you must ordinarily license the invention to another business, often a manufacturer or distributor, who will invest in mass producing, advertising, and selling it. But in pitching the invention to potential licensees, you run the risk of disclosing so much information that the invention might be stolen.
To protect your invention, you should, consider two common strategies that are used by inventors. First, you could file a provisional patent application, if your invention is patentable. Second, you could have a nondisclosure agreement signed, regardless of whether the invention is patentable or not.
If your invention might qualify for a patent, it may be worth your while to file a provisional patent application and obtain “patent pending” status. Most often, this will deter someone from taking it because it will become known that you are serious in protecting your legal rights. You should hire a patent attorney to help you with this process.
If you or an attorney determines that the invention is probably not patentable, the most effective way to protect yourself is to have prospective licensees sign a nondisclosure agreement before you disclose your invention. The agreement must be signed before you meet with any potential buyers so that they cannot disclose any secrets. If the potential buyer signs the agreement and later uses your secret without your authorization, you can sue for any damages.
Nondisclosure agreements will vary in format but they contain these important elements: a definition of what is and what is not confidential information; obligations of the party receiving the confidential information; and applicable time periods. The nondisclosure agreement must also provide for arbitration of any dispute.
It is always best to get a prospective buyer to sign this agreement but you may not always be able to convince the buyer to do so. This would leave you in a very vulnerable position. If a prospective buyer refuses to sign a nondisclosure agreement, this should be a red flag to you. It is very common for manufacturers and distributors to sign this type of an agreement.
If you do decide to disclose your invention, you should proceed very cautiously. Consider hiring an attorney to help you determine what is best for your situation.
