Wallace Law Firm

Innovation Protection & Enforcement



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Ideas need NDAs

     An idea is without an identifiable manifestation (making the idea obvious or proving the idea in a tangible way).   An idea cannot be registered as a patent, trademark or copyright.  That just leaves trade secret protection, an NDA.

     The Non-Disclosure Agreement (NDA) is a form of “protecting" inventors’ ideas from being stolen by signing a contract.   It does not stop the act of revealing your secret, but does create a contractual obligation with teeth to go after the revealing party.   However, an NDA covering an idea is like trying to protect a trade secret.  Once someone tells your idea or secret, you lose that competitive edge forever.  Your only recourse is to sue for breaching the NDA and that won’t put the secret back into the shadows.

     For the most part, an idea that is not even on the blackboard yet is not worth anything in the business world.  Presentation matters.  Unless investors can see it and have some intellectual property registration to protect, an NDA is usually indicates your invention is immature.

     1.       Remember talking still counts as a disclosure.  If you disclose something to another, does that other person have an obligation to keep what you are saying to themselves?  Even if you can explain your idea without disclosing how it really works or how to build it, what business value would that conversation actually have?  To provide the actual idea’s core value, you should at least have the audience promise that they will keep the secret safe and not disclose it to another.  That is an NDA.  Moreover, if the audience wants to know your secrets, they will sign one.

     2.       Even if they sign the NDA, they always have the ability to steal or disclose your idea.  That means you must litigate.  You file a lawsuit.  You sue for damages.  The whole suit is based upon your NDA.  So that means you have to plan to litigate before you disclose your idea to another.  Help draft your NDA as if you already had a breach.  This allows you figure out both how you can be damaged and what that damage is worth.  You and the audience would agree that if a breach occurs, this is what will happen.

     3.       What if the notion of your NDA offends the audience?  Move on.  Knowing that you will have to file a lawsuit does not prevent dishonest people stealing your idea.  Likewise, reverse engineering or a free use excuse may obfuscate your NDA enforcement attempts.  Use your own sense to realize why someone won’t sign an NDA to gauge whether you could work with that person in developing your idea or assist paying for the development.  It is better to not preview your idea to those who do not respect your rights to protect your idea.

     4.       An NDA is not perfect.  There are many ways around enforcement.  And remember enforcement does not mean that an NDA will stop a third or fourth party manufacturer.  Eventually you may win the contract suit against everyone, but then the question is can you recover the damages?

     5.       Use your best judgment to start the relationship off right?   Pick the right audience.

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