Do you have a great idea but don’t know how to get it to market? You are not alone. No business can do everything, and most great ideas involve input from a lot of people from conception to market. You might need to talk to designers, developers, manufacturers, market researchers, investors, etc. How do you talk to these people safely?
The common practice is to use a confidentiality agreement (sometimes called a ‘non-disclosure agreement’ or ‘NDA’). Confidentiality agreements protect sensitive information. They create an obligation to keep your information secret and not misuse it, and they help preserve your ability to register a patent or design. They are particularly useful for working out whether an idea is feasible before investing too much in it. This article will help you avoid some of the pitfalls of using confidentiality agreements.
What does a confidentiality agreement do?
When a proposed recipient of your information signs a confidentiality agreement, they agree to accept that information on certain terms. These usually include keeping the information secret and using it only for certain purposes. It gives you the right to apply to a court for an order to stop them misusing your information, and for damages if they have already done so and you have suffered loss as a result.
Do I really need a written agreement?
Our clients often ask whether it is enough just to tell the recipient that information is confidential. The answer is that it is better than nothing, but far from ideal. In that situation you may not have enough evidence to show a court that there has been an agreement to accept that information in confidence and a breach of confidence. Having a written agreement puts you in a much stronger position.
A written agreement can also increase your options for intellectual property registration. For example, to obtain a patent or registered design, the idea or design must usually be novel (ie: not publicly known or commercially used) when the application is filed. Using a confidentiality agreement prevents your disclosure of your invention or design to the recipient from being a public disclosure.
What should it cover?
While a short confidentiality agreement might be easier to get signed, it might not address some key issues. Here are a few of the things to consider before using an agreement: