Nondisclosure agreements, commonly called NDAs, are an excellent way to protect your ideas early on. Understanding what NDAs are, how they work and what they should include can provide you with legal protection, even before you file for a patent application.
What is a Nondisclosure Agreement?
A nondisclosure agreement, in its most basic form, is a contract between two or more parties that guarantees a confidential relationship between the person who holds a trade secret, or other confidential information, and the person, or persons, to whom the secret will be disclosed. Nondisclosure agreements are legally enforceable contracts.
What Benefits do Nondisclosure Agreements Provide?
NDAs provide protection in a number of ways. Some of the many benefits they offer include the following:
They protect confidential information. NDAs are legally binding. Therefore, if any of the parties breach the contract and divulge sensitive information, the injured party has the right to claim breach of contract.
They allow inventors to confidentially share their idea with others, even if they aren’t ready to file a patent application yet. US Patent law requires that you must file for a patent within 12 months of first “public use.” Disclosing your new product or concept to another person without an NDA in place is usually considered “public use” and would begin the 12-month countdown automatically. Using an NDA prevents the disclosure from being “public use” so the 12-month period does not start to run. This allows you to share your idea with others confidentially long before you are ready to file a patent application.
They clearly outline what information is confidential and what information is not. NDAs classify all of the information involved as either confidential or open for public use. This leaves no doubt as to what information is sensitive and must not be divulged.
NDAs provide protection for almost any kind of information. They can be drafted to protect customer lists, laboratory results, system specifications, passwords, business models, and many other types of data.
Drafting a Nondisclosure Agreement
To ensure complete protection of new products, concepts or ideas, your nondisclosure agreement must be well drafted. As was mentioned earlier, it must state in clear terms exactly what information is considered confidential. Besides outlining the definitions of confidential information, it must also clearly state any information that is excluded from protection. When NDAs are accurately drafted, sensitive information will stay protected. If you need advice about or help drafting your nondisclosure agreement, please feel free to contact me for assistance.
Kelly G. Swartz is a patent attorney licensed to practice in front of the United States Patent and Trademark Office and in the state of Florida. She limits her practice to intellectual property law including patent, trademark, copyright, and trade secrets.