Nondisclosure Agreement

A nondisclosure agreement is a special agreement between someone willing to provide confidential information, and a willing recipient of information. The recipient agrees to keep certain information confidential in exchange for some benefit (e.g., to evaluate new technology for its potential benefits). The provider of the information hopes to interest the recipient in purchasing or licensing the information. If you’re dealing with a patent practitioner, especially a patent attorney, the practitioner is bound by a professional code of conduct which requires him to keep such information confidential, whether or not he signs such an agreement. Other professional service providers, or any individuals wishing to sell something to you, are usually happy to sign such an agreement if it is necessary to get your business.

On the other hand, in instances in which a company manufactures, markets, and sells its own products, it is much less likely to be willing to sign such an agreement. In fact, most large manufacturer-distributors simply refuse to sign such agreements, as a matter of corporate policy. These companies evaluate many different inventions which are developed both internally and by independent inventors. Sometimes they find that an invention submitted from the outside is similar or identical to one which they have developed internally. Understandably, these companies do not want to be sued by an irate independent inventor, should they coincidentally have been planning to manufacture and sell a product similar to that disclosed by this inventor. Neither do they want to be subject to a lawsuit, if, in their opinion, the invention is an obvious improvement over the prior art.

Therefore, if you wish to have larger manufacturer-distributors consider your invention, you will probably not be able to rely on the protection of a non-disclosure agreement. In this case, probably the only effective way to protect yourself is to first file a thoroughly descriptive patent application. By doing this, if the manufacturer refuses to become a licensee under your patent, yet goes ahead and manufactures your invention, you will be able to sue him for infringement, once the patent application matures into a patent.

Even if you have filed a patent application, some manufacturers will refuse to evaluate your invention until your patent grants (e.g., Tupperware Corporation). If this is the case, you have little choice but to wait for your patent to grant, or to pursue a license agreement with other companies who do not have such a requirement.

Unfortunately, there are always those companies which refuse to consider all outside inventions whatsoever. This mentality is commonly known as the “Not-Invented-Here” syndrome. These companies prefer to hire the inventors, and to develop inventions in-house. They are willing to forego the opportunity of reviewing outside inventions, in order to reduce the risk that they will be sued for misappropriating some independent inventor’s idea. Therefore, don’t be discouraged when such companies send you the ‘Thanks, but No Thanks’ letter.

Finally, if you have a concept for a new business, be warned! Such ideas are generally not patentable. (Business methods which require hardware (e.g., a computer and a database) to implement, may be patentable). If you disclose such concepts without having first entered into a nondisclosure or consulting agreement, you are at risk of virtually giving your concept away. In cases in which a company has signed a nondisclosure agreement, certain ideas and concepts, even for new business ventures, may be protectable, provided that you can prove that your concept is novel. However, litigation is more likely in these cases.

Maximize the Long-Term Benefits of Patent Protection Through Brainstorming

In order to properly develop your invention, you must consider the prior art and other technologies which might compete with or enhance your invention. Most of us would claim we do something like this before we make a decision to buy a product. After we have decided that we need a product to meet a specific need, we first consider the competing products: how well they function; and how much they cost; right? We should do the same thing in the product development process because, ultimately, we want consumers to buy our products and not someone else’s. I have found that the best way to develop inventions is to brainstorm.

Your goal in brainstorming is to mature the design of the invention, and to identify shortcomings in the original design which otherwise might, in the future, be the subject of a rival inventor’s patent application. Remember, if someone else gets a patent on improvements to your invention, you will not be able to use those improvements to enhance products based on your invention without first obtaining a license from the owner of the patent for the improvements. In addition, the more you have refined your design by the time you file your patent application, the higher the probability that the patent, once it grants, will be enforceable.

Further development of the invention produces a better understanding of the greatest potential breadth of the intellectual property. This enables the patent practitioner to draft claims in the patent application which, if the examiner allows them, will result in broader patent protection. Broad patent protection means that the patent should be difficult for a competitor to circumvent. In an attempt to uncover any weaknesses in the patent which might enable in-house engineers to design around it, the competition’s legal and engineering departments will subject a valuable patent to intense scrutiny. To help prevent a negative result from such scrutiny, you and your patent practitioner can play the part of a typical competitor so that you can better forecast how the competitor might respond to your patented invention. With this forecast, you can then review and modify the patent application to preclude some of these possible design-arounds. I sometimes refer to these sessions as “defensive driving sessions” because you are trying to prevent an in-court collision with your competition by anticipating his moves.

‘Defensive driving’ is essentially brainstorming the technology in order to consider every conceivable alternative design which could do what your invention does, without infringing the claims of your draft patent application. In order to have an effective brainstorming session, it is important that at least one of the participants in this session be familiar with a variety of technologies and with design engineering practice. You or your patent practitioner may have this experience. If neither of you has this experience, you may be able to find a consultant to fill this role. If you hire a consultant, I have a couple of words of caution. You should make it very clear that what you discuss in these sessions is confidential. In addition, you should have the non-attorney participants sign a consulting agreement in which they agree to assign to you any patentable concepts which they might suggest during the session.

Taking Advantage of the Results of a Patent Search

You can glean valuable information from a patent search. For example, you may use the information from the search to expand the disclosure in the specification of your patent application in order to bring it up to the state of the art. That is, by describing the most obvious modifications to your invention in your patent specification, you can prevent a subsequent inventor from obtaining an enforceable patent on these improvements.

In addition, the patent search should indicate how many other inventors have made claims in the field of the invention. You should also be able to learn whether subtleties distinguish the patents, or whether there are major differences. These facts will give you and your patent practitioner a general feel for the level of patent protection that the Patent Office may be willing to grant to you.

You can glean still more information from the prior art patents which you discover during the patent search. For example, if many of the inventors in the field have assigned their patent rights prior to the time their patents were granted, this indicates either a field which corporate inventors dominate, or that many independent inventors were able to license their technology before their patents issued. (Look to the first page of the prior art patent, just below the name of the inventor. If you find the heading ‘Assignee,’ then the inventor assigned the patent to a company prior to the time the patent granted). If either is the case, you are inventing in an active technical field. On the other hand, the fact that the inventors of most of the patents have assigned their patents may indicate that the industry is closed to outside inventors. In order to distinguish between the two possibilities, you will have to use your common sense, and consider other factors such as the relative size of the licensees, the nature of the industry, and so on.