Let’s say you figure out a way to build the proverbial better mousetrap. Now you plan to sell the item to the highest bidder. How do you protect the invention when you shop it around?
There are different ways to secure your interests. First, if the invention potentially qualifies for a patent, you might have a provisional patent application (PPA) filed on your behalf. This provides you
If you plan to sell your patented product or service outside the U.S., you may want to file patent applications in other countries. However, foreign patent filing can be expensive and in some counties, the protection is minimal. Talk with your attorney for more information about whether you need to safeguard your product outside of the United States.
with “patent pending” status for your invention. If you don’t follow up with a regular patent application, the PPA expires after a year. You can still file a regular patent application afterwards, but you won’t get any benefit from the earlier PPA filing date.
In the event the invention isn’t patentable, you should have a prospective buyer or licensee sign a nondisclosure agreement (also called a confidentiality agreement). If this agreement is violated – for instance, the company uses the product without your authorization — you may be able to sue for damages.
For example, a British inventor sued Electrolux after he claimed the Sweden-based company copied his vacuum cleaner design without permission. The inventor, John North, disclosed his design for a bagless, upright vacuum in several meetings after signing a confidentiality agreement with Electrolux. Nothing came of the meetings.
But after seeing an Electrolux vacuum in a store that he felt was similar to his, North filed a lawsuit in U.S. District Court in El Paso, Texas. Shortly after the jury trial began in 2004, a settlement was reached. Under the agreement, Electrolux paid North $30 million in exchange for dropping all claims.
In a statement, Electrolux maintained there was no merit to the charges but it “entered into the settlement because it brought the matter to an end with a known outcome rather than the uncertainty of a jury decision.”
Using a Nondisclosure Agreement to Keep Your Invention Under Wraps
Although the terms of nondisclosure agreements vary, they generally include these four elements:
1. An explanation of the confidential information and any exclusions.
2. A description of any physical product.
3. The obligations of the parties.
4. The length of the agreement.
Key point: The agreement may strictly prohibit the company from breaching the confidentiality, inducing others to breach it or acquiring confidential information through improper means. However, nondisclosure agreements are not a substitute for a patent.
Most reputable companies are used to dealing with nondisclosure agreements and accept them. However, you may run into potential partners who refuse. Keep in mind the agreements may include certain obligations on your part (for example, you may be barred from revealing trade secrets about the company’s manufacturing process). Consult with your attorney before proceeding and signing on the dotted line.