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Special Warning About Non-Disclosure Agreements

By Stephen Paul Gnass

A note about "non-disclosure agreements" (also know as "confidentiality agreements"). A non-disclosure agreement is used when someone with an unpatented idea shows it to another party, and wants that party to maintain as confidential any information he learns about the product as a result of the meeting. The inventor draws up the non-disclosure agreement and has the other party sign that he/she will not disclose any of the information to anyone else, and will not market the idea or compete with you.

The reality is that most legitimate companies refuse to sign confidentiality agreements with inventors because they feel that they may have something like this already in the works in their in-house research department. In fact, large companies usually have inventors sign a "release" which relieves their company of any obligation or liability to the inventor if the company markets a similar product in the future.

So a major tip-off to a scam company is that they freely send pre-signed non-disclosure agreements in their "sales" literature before you've even had a chance to talk with them or after a brief phone conversation!

Until you have a patent, non-disclosure agreements should be used "selectively" and are recommended as a tool only after the inventor has progressed to the point where he has done everything he can do on his own in the initial R&D phase, and absolutely needs a professional to perform a specific function, for example, a prototype maker or a manufacturer, who absolutely needs to know how your product works in order to perform their special work.

When shopping for services, you do not need to reveal your idea, but can talk about it in general, generic terms. When you have made a final decision to work with a specific service provider, then it's a good idea to have the company sign a non-disclosure agreement. By using non-disclosure agreements selectively, you will limit the number of people that know about your products details, and reveal it only to the service provider(s) you have hired that you feel confident with.

However, it is important that you use the "First-to-Invent" procedures according to official standards before having anyone sign a non-disclosure form. If you have any companies sign a non-disclosure form without utilizing the proper protection methods, your idea may be in jeopardy.

DISCLAIMER: This information is not meant to be legal advice. Please note that the proper professionals should be contacted for legal advice.

This is a condensed version of the comprehensive article about Nondisclosure Agreements located in the Special Reports Section.
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