Confidential Disclosure Agreement
Confidential Disclosure Agreements, also known as Non-Disclosure Agreements, are legally-binding documents that enable you to record the terms under which you exchange secret information. You are strongly advised to consider using one if you are going to disclose the details of your secret technical idea to another party. That is not to say that a duty of confidence cannot arise even in the absence of such a contract. But recording the duty in a written agreement gives added legal certainty.
The other party to the agreement can be any person or an organization.
For example, it may include not only potential business partners but also your own associates, contractors, employees or even your family or friends.
Normally confidentiality clauses will form part of a broader agreement, such as a contract of employment. But for new companies it’s important to consider what may happen in the event that associates/contractors or employees do not, for one reason or another, actually sign up to a contract.
Thus if you intend to communicate your idea to another party an important point to consider before doing so is: do I need to use a Confidential Disclosure Agreement? Having a signed Confidential Disclosure Agreement means you will be able to tell a potential partner more about your invention with more safety. Also, without one you may not be able to tell them enough to get them interested.
But do you always need to use a Confidential Disclosure Agreement? There will be some companies who, for perfectly valid business reasons, do not wish to sign a Confidential Disclosure Agreement; this doesn’t mean that they are dishonest but simply that they may not wish to receive any confidential information: for example, because they want to avoid conflict with areas they may already be working on. So, on meeting another company for the first time you may only need to outline the commercial benefits of your invention without having to tell them about its technical features. If you can explain what your idea does, but not how it functions or how it’s made, that may be enough to excite interest at a first meeting. Thus, you might just say something along the lines of: “my product costs twenty times less to produce and lasts three times as long as those on special price in the market”.
Nevertheless you should still think about the risk of not having a Confidential Disclosure Agreement in place. Indeed when entering into discussions with potential collaborators or partners it is good practice to discuss confidential disclosure requirements.
Points to consider when using Confidential Disclosure Agreements.
• It is highly recommended that you consult a solicitor or a patent attorney about how to protect your ideas and the risks of communicating these ideas to someone else.
• Ask the person/company you are communicating with if they have a Confidential Disclosure Agreement they may wish to use that serves both of your interests - but read it carefully and consider taking legal advice.
• Have a Confidential Disclosure Agreement prepared and send it to the other party for them to consider.
• Make some sort of record of what was disclosed at a meeting. For example, you could ask the other party to acknowledge a paper copy of a computer presentation, or drawings etc. that describe the technical details of your idea and the date on which you first showed it to them, in whatever form (e.g. paper, an email attachment or an internet video streaming player).
• There is no “one-fits-all” Confidential Disclosure Agreement. The following is an example of a Confidential Disclosure Agreement that shows the types of clauses that are often found in these documents. This typical agreement is merely an example and therefore may not apply directly to your particular circumstances.
Please note: We cannot take any responsibility for any events that arise from your use of the example Confidential Disclosure Agreement or any of the information in this document. We advise you to get independent advice before acting on any matters that may involve the issue of confidentiality.