Confidentiality Agreements or Non Disclosure Agreements (NDAs) can be used if you need to disclose your innovation to someone before you have filed a patent application. Most innovative businesses are aware that you must file your patent application before there is any public disclosure of an invention. However, it might not be practical to keep something completely secret during the R&D process and before it is ‘ready’ for the start of the patent process. For example, you may need to present the invention, at least to some extent, to a potential investor or to a funding body or organisation in order to secure the funding you need to continue the product development process. Or you may need to discuss the invention with a potential manufacturer to allow you to work on the manufacturing specification, or to a potential licensee or distributor to allow you to establish a viable route to market before committing any further funding to the development process. You can disclose your innovation in confidence to one or more individuals, and still file a valid patent application afterwards. However, you cannot simply assume that these types of conversation are confidential, irrespective of the context of the discussions, the positions or roles of the individuals you are talking to, or even any verbal agreement you have between you as to the secrecy of the discussions. The best way to proceed is to have a signed Confidentiality Agreement or NDA in place before any sensitive discussions occur. Read on to find out more…
What is an NDA?
An NDA is a legal contract between you and one or more other parties, setting out the conditions under which information will be shared between you. It should, at the very least, include some identification of the information that will be shared, the purpose for which it is being shared (and to which it is restricted), the extent to which the information can be shared with others (for example, the person you are talking to may need to share the information with other employees within their organisation) and, often, the length of time for which the NDA is to apply. You can specify a term (commonly between 3 and 5 years), but once the information has been disclosed in a public manner (for example, a patent application including the information has been published), the NDA is no longer enforceable. So, if an NDA specifies no term, its provisions will usually simply continue to apply indefinitely, effectively ending only once public disclosure of the relevant information has occurred. However, you need to be careful here, because the public disclosure may not include all of the information discussed, so the NDA may still be partially enforceable for other (perhaps commercial) information, and in these circumstances it is wise to seek formal legal advice as to the extent to which an NDA may still be valid.
Do you need an NDA for discussions with a patent attorney?
No. All registered UK Patent Attorneys are bound by a strict code of conduct set down by our regulatory board IPReg (https://ipreg.org.uk/). The code of conduct (found here) sets out our duties and obligations in relation to confidentiality (see Rule 8 of the Rules of Conduct) and, as these tend to go some way beyond the conditions laid out in any standard NDA, they are more than adequate in terms of protecting your interests.
Different Types of NDA
There are a few different types of NDA that fall into two categories, namely one-way NDAs and two-way or ‘mutual’ NDAs. As the names suggest, a one-way NDA only binds the recipient of the information to the requisite confidentiality conditions, whereas a mutual NDA binds both (or all) parties to the same conditions in relation to discussions between them. For example, a one-way NDA might be suitable for a discussion with a potential manufacturer or investor, whereas a mutual NDA may be more suitable for discussions with a potential collaborator. However, these are just general examples and the NDA you use will be highly dependent on your specific circumstances and the purpose of the disclosure, and careful thought needs to be given to those when deciding on the right type of NDA. It is also important that you understand your own duties and obligations in relation to any NDA you sign, so if a third party provides an NDA for you to sign, check it carefully to make sure the confidentiality conditions don’t (or won’t) restrict your future commercial activity unnecessarily.
Do you need a patent attorney or solicitor to draw up an NDA?
Not necessarily. If the circumstances are relatively straightforward, and no specialist conditions and clauses are required, it may be sufficient to use a template and adapt it to your needs. There are many different online templates available, to suit all sorts of different circumstances. For example, the UK Intellectual Property Office offers guidance and some templates here.
During Discussions
Only disclose the information that is required to meet the specific objective or purpose of discussions. Commercially sensitive information, like confidential know-how, financial information, customer details, trade secrets, non-associated business plans, personal information, etc. should be kept secret as they may not be covered by the NDA. Keep a record of what was disclosed, and to whom.
And finally…
Whilst it is a useful business tool, an NDA is only effective (and enforceable) if you know who to enforce it against. If discussions have been had with dozens of different people or organisations, and a breach of confidentiality is subsequently identified, it might be difficult to determine which of these people or organisations is responsible for the breach and, therefore, who is legally liable. For that reason, it is advisable to limit the number of people or organisations you speak to under NDA to a small number, preferably trusted in some way (e.g. you have a previous business relationship or they come recommended by a trusted business associate). By keeping an accurate record of what was discussed and what information was shared, the source of any breach may be easier to identify (and prove).
If you have any questions about NDAs or about any IP-related matter, please do contact us:
Tel: 07714 797135 or Email: vicki.strachan@strachanip.co.uk
