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How To Use a Non-disclosure Agreement

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When you have an unpatented invention, you need to talk about. You can use a non-disclosure agreement to protect your ideas.
Difficulty: Average
Time Required: Variable

Here's How:

  1. A non-disclosure agreement or confidentiality agreement is used when you have an unpatented idea that you need to show to a third party and you want that party to not reveal any information about your idea.
  2. The inventor is the one who usually provides the non-disclosure agreement (NDA) at the meeting.
  3. In summary, the other party signs in a non-disclosure agreement that he/she will not disclose any of the information about your invention, except under terms as described in the contract, and will not market the idea or compete with you.
  4. Having a meeting or discussion about your invention, without an non-disclosure agreement, would constitute a public disclosure. You then would only have one year to file for a patent or forever lose that right.
  5. Do not use an non-disclosure agreement lightly. Only approach third parties when you have to (i.e. you need a prototype built and you can't do it yourself).
  6. Even with an non-disclosure agreement, still only talk about your invention them with people whose integrity you can trust. Even with a person you trust, always sign an non-disclosure agreement before discussing your invention.
  7. Non-disclosure agreements are the cheapest form of protection for an invention you can use, but they are not a substitute for a patent application. Do not rely on them to protect you.
  8. Non-disclosure agreements are contracts that are controlled by state law, some states find non-disclosure agreements invalid. Consider having a lawyer write your non-disclosure agreement.
  9. A lawyer can also help you draw a contract which is suitable to both parties. Many large companies routinely refuse to sign an non-disclosure agreement, fearing that it may later result in a lawsuit.

Tips:

  1. You can shop for services without using an non-disclosure agreement. Use general terms and examples of similar products already on the market to describe your invention and get a cost estimate.
  2. Some less than honest invention companies will send you a signed non-disclosure agreement. Please read the related feature on "Invention Company Scams".
  3. Get to the patent pending stage first before approaching any venture capitol, development, marketing or licensing companies.
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