Inventors: Don’t Rely on a Non-Disclosure Agreement (NDA) to Protect Your Idea from Getting Stolen
If you’re an inventor or product developer with a great idea that you want to profit from, the idea of someone else stealing your idea can be sickening. It’s bad enough to think of someone else pocketing the money you expected to make on your invention, but can imagine also being denied the legal right to make and sell the very thing you invented, while someone else gets rich from it?
It can – and does – happen. Very, very easily.
One way it happens is when an inventor relies on a non-disclosure agreement (NDA) to protect their idea from getting stolen when sharing it with another party.
For example, you might have an idea for a mobile app, and you decide to outsource the software coding to an independent contractor. You have the coder sign an NDA, because you believe it will prevent the coder from stealing your idea.
Unfortunately, a signed NDA provides flimsy protection.
What is an NDA?
A non-disclosure agreement is a legally binding contract in which the individual(s) who sign it agree to keep confidential certain information that’s being disclosed to them. (Another name for an NDA is a “confidentiality agreement.”)
But what happens if someone signs an NDA, then blabs the confidential information to someone else who didn’t sign the agreement? That’s called a “breach.” The NDA will explicitly state the consequences of a breach. Commonly, they include suing for monetary relief.
Why Doesn’t an NDA Protect My Idea from Theft?
When an individual signs an NDA, they are legally agreeing to keep certain information confidential. However, that information can be leaked — easily.
When you hear about “leaking information,” it may conjure up the image of two people in trench coats handing off a microchip on a crowded sidewalk. But the reality is, a “leak” of your idea can be as simple as the person who signed your NDA turning to their roommate and saying, “Dude, listen to this idea.”
Maybe you’re thinking, But they just broke the agreement! Now I can sue them!
1. But when you go to court, will you be able to prove that the leak originated with the person who signed the NDA? The NDA only applies to the person(s) who signed it – no one else.
What if the person who signed your NDA asked their roommate to ask his cousin Ferdinand’s best friend Joe’s sister Maureen to file a patent application on the idea, with a verbal promise to pay her off later?
Even if you were able to track that chain (which would probably be impossible), could you prove, without a shadow of a doubt, that Maureen didn’t happen to have the exact same idea as you? Really, really prove it?
And in the meantime, can you afford the mounting legal bills while you try to seek proof and fight?
The Patent Office Doesn’t Care if You Thought of it First
So, your brilliant idea was ultimately leaked to Maureen who rushed off and filed a patent application for it.
You might be thinking, A-ha! Now I’ve got ‘em! I’ve got months’ worth of notes and sketches and dated receipts for the supplies I used to build a prototype. I can prove to the Patent Office that this was my idea first!
I’ve got sad news for you, my inventive friend. The Patent Office couldn’t care less about your mountain of proof.
The U.S. Patent and Trademark Office works on a “first-to-file” system. In a nutshell, that means the Patent Office will give the patent to the first person to file an application on the idea – not the first person to think of it.
Yes, you can steal somebody else’s idea and get a patent on it – legally. And furthermore, that patent means that it’s illegal for you to make or sell the invention without the patent holder’s permission.
What’s Safer Than an NDA?
Now that you’ve seen how easy it is for someone else to claim and profit from your idea, you might feel discouraged.
Please don’t. Every day, ordinary people have great ideas, lock down their ownership on those ideas without getting duped, and even become wildly rich from their inventions. You can, too.
The first step is to steer clear of the NDA and instead, rely on attorney client privilege.
Attorney client privilege is a rule that keeps information shared between an attorney and their client completely secret. This rule prevents attorneys from sharing their clients’ secrets, and no one can force them to share them. It’s one of the strongest bonds any two people can share. Even an attorney’s staff is bound to adhere to attorney client privilege.
The consequences of an attorney breaching attorney client privilege are severe. The attorney can face criminal charges and disbarment.
When you bring your invention idea to a patent attorney, you can feel reasonably confident that your invention is safe.
If you need to share your invention with anyone, including contractors, investors, and potential licensees, it’s always best to file a patent application first with the help of a patent attorney.
Once you’ve filed a patent application, your idea is officially considered “patent pending.” At that point, you can safely share the details of your invention with others.
In Summary
Don’t rely on a non-disclosure agreement (NDA) to protect your invention idea from being stolen when you share it with someone else, like a contractor, potential investor, manufacturer, or potential licensee. The information protected by NDAs is too easily leaked, and it can be extremely difficult to prove the source of the leak in court.
If your invention is leaked and someone files a patent application on it before you do, you could lose your rights to your own idea, because the U.S. Patent Office works on a “first to file” system. They will give a patent to the person who files an application for the idea first, not the person who can prove they thought of it first.
It’s safer to go to a reputable patent attorney and file a patent application on your idea first before you share it with others. Your patent attorney and their staff are bound by attorney client privilege, which means that any information you share with them is kept secret. As soon as you file a patent application, your invention enjoys “patent pending” status and can then be safely disclosed to other people.
How to File a Patent Application – and How Much it Costs
If you have questions about how to file a patent application and what it costs, call The Patent Professor® at 1-877-728-7763.
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