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Initial Idea Protection

Non-Disclosure (Confidentiality) Agreements

By Stephen Paul Gnass

Page 3

Once you have shopped and decided which company you are going to work with, naturally you must reveal the details of your idea and how it works in order for the company (for example: a prototype maker) to do his job. At this point, use the Non-Disclosure Agreement to protect yourself before any work is started. In this way, you are using the Non-Disclosure Agreement "selectively" throughout the period prior to applying for a patent.

In recap, the Non-Disclosure Agreement should be used after you have made the decision to work with a certain company or individual - who absolutely needs to know how your product works in order to perform their special craft. Working this way, you'll narrow down the amount of people that know about your product, and will greatly reduce the risk of someone stealing your idea.

WHAT IF THE COMPANY REFUSES TO SIGN A NON-DISCLOSURE AGREEMENT?

There are always "what ifs" in life. If a company you selected refuses to sign a Non-Disclosure Agreement, you will have to make a personal decision about whether to work with the company or not. Since you do not have any patent protection yet, you'll need to assess whether you can take a risk to work with this company.

If they won't sign a Non-Disclosure Agreement, it isn't necessarily a sign that this company intends to steal your idea. There may be valid reasons for not signing Non-Disclosure Agreements. For example, if you already have a patent, there's no need for a company to sign a Non-Disclosure Agreement and most companies will refuse to sign them, but at this stage where you're patented, it's a valid refusal. The company may have had a previous bad experience where they signed a Non-Disclosure Agreement and ended up being unfairly sued, thus they developed a policy of not signing them in the future. If the company happens to be the best in the industry, it might be worth the risk to work with them anyway. On the other hand, it might not. Don't jump to conclusions one way or the other. Be sure to do your research and ask them the specific reasons why they won't sign one.

So you need to take all the specific circumstances into consideration, and weigh the benefits as well as the risks if a company you selected refuses to sign a Non-Disclosure Agreement.

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