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Non-Disclosure (Confidentiality) Agreements

By Stephen Paul Gnass

Page 4


There are inventors who try to approach well-known large companies in these early idea stages in the hopes that the company will just "buy out" their idea. However, large companies most often (of course, there are always exceptions to the rule) refuse to sign Non-Disclosure Agreements, feeling that they may have something like this already in the works in their research department. Naturally, the company's officers do not want to compromise themselves in any way. And you can't really blame them, since they are employees of the company and they are only doing their job. They don't want to risk their jobs by creating a possible legal liability for their company by signing your Non-Disclosure Agreement.

While they may agree to meet with you and review the idea, they will probably not promise that they won't work on something like it without you. In fact, large companies usually have the inventor sign a "release" which relieves the company of any obligation or liability if they market a similar product in the future.

Therefore, approaching large companies without adequate protection is basically an invitation for them to develop (not necessarily steal) your idea. Because there is such a high turnover of staff in large companies, a new person may come across your idea later and decide to market it, thinking that the idea was developed in-house. Even in such an innocent scenario, you would have no recourse because you signed their release, and didn't get a signed Non-Disclosure Agreement. Therefore our recommendation is that you wait to approach any of these types of companies until you at least have a patent pending.


So on the one hand, you have large well-known companies that refuse to sign any non-disclosure forms in order to protect their company's self interests. On the opposite end of the spectrum, you have large invention development companies, who routinely mail pre-signed non-disclosure agreements to anyone who happens to respond to their ads on TV, radio and magazines.

There are a number of these product development companies which advertise their services nationally on late-night TV, radio and in the classified sections of major magazines like Popular Science. They offer to mail inventors a "free information kit". This kit happens to include a pre-signed "Non-Disclosure Agreement" (usually known as a Confidentiality Agreement) in which inventors fully describe their invention, draw a sketch, sign the form and return it by mail.

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