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Should I sign a Non-Confidential Disclosure Agreement?

Should I sign a Non-Confidential Disclosure Agreement?
« on: May 25, 2013, 07:38:50 PM »
Greetings, all!

While shopping for prospective manufacturers to market my invention (that's pat. pending), I was sent a Non-Confidential Disclosure Agreement to sign. What dangers are there for me, as an inventor, if I were to sign it and/or they won't sign a Confidential Agreement (or NDA)?

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« Last Edit: May 26, 2013, 08:03:05 AM by Brad »


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Re: Should I sign a Non-Confidential Disclosure Agreement?
« Reply #1 on: May 26, 2013, 08:00:21 AM »
This is a great question and this is very common.  It is also common for companies who are your potential licensees or purchasers of your patent to refuse to sign a NDA or CDA.   In general, I think this is okay and I understand where they are coming from.  Just be careful. 

First, please put yourselves in the shoes of the company who you hope will be your licensee or purchase your patent.  These companies often have deep pockets, established brand recognition, millions of customers, millions invested in research, etc.  Basically they have lots to lose by working with individual inventors.  There is lots of risk for them and companies hate risk. 

Now, these companies get flooded with ideas from people like you and me daily.  Most of them (my guess will be 99% or more) are not something that the company is interested in.  It may be that its a silly idea, or, it may be a great idea but not the direction the company wants to go in.  In any event, most of them will be a waste of the companies time. 

From a time management perspective, it almost does not make sense to take or accept any ideas from people outside of the company so when you find a company at least willing to accept ideas from the public, that is a good thing but you have to play by their rules. 

Now, out of the 1,000s of ideas they get, it is unlikely that they will accept any of them.  However, I can guarantee you that some people who submitted their ideas to the company may eventually see their idea (or something close to it) in the market and blame the company for either stealing their idea or leaking their "confidential information" to another company.   A few of these upset people may even try to sue the company.  (I get contacted all the time from inventors who are convinced a large company they sent their ideas to stole them).    So in summary, from a risk perspective and time management perspective, it almost makes no sense for an established company to take on ideas or agree to receive your inventions.

The solution that some companies use is to make you sign a non-confidential disclosure agreement like the one you posted.  This is their way to reduce the risk that you may come back and try to sue them one day.   Although I don't like seeing these types of agreements as an inventor, I understand why companies want to use them and on the bright side it is nice to see companies agree at all to look at your ideas.

*The important thing to look at with these agreements is to make sure it does not say anything about you granting them rights to use your patent or have a license to your patent.  You should also make sure it does not say anything about you not being able to sue them.    This way, if they do steal your idea and you have a valid patent issued in the future, you should be able to sue them in court for violating your patent.

*Always make sure you at least have a provisional patent filed first before you share any details about your invention with a company and especially before you sign a non-confidential disclosure agreement.

(this is not legal advice and I always suggest you hire an attorney to review any agreements or contracts before you sign them)
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