Reader Question: Should I take my idea to an investor before getting a patent?

L.C. asks:

Quick question. Would there be any issues going to angel investors, or venture capitalists before starting the entire patent process? Would that spark any legal trouble down the line?

My answer.

It's not that it would spark legal trouble down the line. It's that it could. Let me explain...

The patent process grants you a few very specific and very attractive rights. Notably, the right to prevent others from making, using, selling, or distributing the patented invention without your permission.

However, you do NOT get these rights before you patent the invention.

So that means that if you disclosed your invention to anyone (say, an angel investor or venture capitalist) and they "stole" your idea...you could be out of luck.

Now, one of the common ways people try to protect their rights before they get a patent is by using a non-disclosure agreement (or NDA). A common definition of an NDA is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. It is a contract through which the parties agree not to disclose information covered by the agreement. An NDA creates a confidential relationship between the parties to protect any type of confidential and proprietary information or trade secrets. As such, an NDA protects nonpublic business information.

That's a mouthful, and basically it means - if you steal my stuff I get to sue you.

The big difference between a patent and an NDA is that the patent is a government document certifying ownership of (intellectual) property, whereas a NDA is a contract between two people. Which do you think carries more weight?

(Note: I've produced a short video on the limitations of an NDA. You can find it here - http://www.youtube.com/watch?v=fNLioqZvOPE)

The second danger you face if disclosing your invention before patenting it (to anyone other than a registered patent attorney) is if they file for the patent before you do. Right now, the U.S. is a first to invent country, which means whoever invents the thing first has rights to it. That all changes on March, 16, 2013 when the U.S. switches over to a first-to-file system (under the America Invents Act).

Basically, the ONLY person you should be disclosing your invention to is a registered patent attorney. Anyone else, and you're taking a risk.

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