Confidentiality Agreements, NDAs, and patent applications – Which come first?

Do patent applications and confidentiality agreements offer the same level of protection for my invention?

A confidentiality agreement is an agreement to keep the information disclosed by the inventor secret.  This secrecy requirement is common among all confidentiality agreements, although other terms may be incorporated into the agreement. Unfortunately, even if the investor or licensee signs a confidentiality agreement, you still have a relatively high burden of proof before you can enforce the terms of the agreement. For example, you have to prove things such as which ideas you disclosed and if the other party actually breached the terms of the confidentiality agreement. Additionally, you have to pay your attorney fees upfront or convince an attorney to take your case on a contingent basis before getting a damage award from the court.

A patent application does not impose confidentiality, but it does provide protection against investors and licensees stealing your idea. By filing a patent application before you disclose your idea to the investors and licensees, they won’t be able to get their own patent protection for the invention that you disclosed to them. Your application will count as prior art against their application. Additionally, when you ultimately obtain a patent, you have enforceable rights and can sue them for infringement damages.

Patent applications will always be more expensive to obtain than confidentiality agreements, but their long-term benefits likely outweigh the upfront costs.  Also, because disclosure of your invention prior to filing a patent can be problematic, the best course of action is to usually file a patent application first and then have any potential collaborators sign a confidentiality agreement.

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