You have conceived of a wonderful new invention and you want tell everyone, but you are not ready for the expense of a patent application. Should you open your mouth?
Every inventor feels the tension between the need to maintain secrecy and the need to disclose the invention. If you are a regular reader of this newsletter, then you are aware that your sale or offer of sale, public use, or written or verbal disclosure in public can terminate your patent rights forever, with some actions such as public use or sale terminating your rights immediately. But to develop your invention, you cannot avoid having to disclose. You have to present written proposals. You have to demonstrate the invention. You have to consult with others – designers, engineers, manufacturers, business consultants, lawyers, investors and lenders. How do you talk to other people about your invention, including demonstrating your invention, without losing your patent rights?
You have two options: (a) bite the bullet and file a patent application, or (b) have the persons with whom you are consulting sign non-disclosure agreements. A non-disclosure agreement is a written contract between you and the person to whom you disclose the invention. In return for receiving information about your invention, the other person agrees to keep the information in confidence. After signing, the other person is no longer a member of the public and owes you a duty of secrecy. If you demonstrate the invention to that person, you are not using the invention ‘in public’ and do not immediately lose your patent rights. If you disclose the invention to that person in writing, then your written description is not a ‘publication’ and so does not trigger the patent right termination deadlines. If you describe the invention verbally to that person, then your verbal description does not make the invention ‘otherwise available to the public’ to trigger the running of the time to terminate your patent rights.
The other major advantage of a non-disclosure agreement is that it is immediately enforceable. If the person who signed the non-disclosure agreement copies your product, you can file suit in court immediately. You do not have to wait the three years or so that it will take for your patent to issue.
There are weaknesses to non-disclosure agreements. Beware selling or offering the invention for sale. Even if a person signs a non-disclosure agreement, offering to sell the invention to that person likely will terminate your U.S. patent rights instantly and forever.
There is also the problem of who signs the non-disclosure agreement. If the other person is a corporation, the person signing the non-disclosure agreement on behalf of the corporation must have authority to sign, or at least ‘apparent authority.’ The company CEO has ‘apparent authority.’ The CEO’s secretary does not have ‘apparent authority.’ Without actual or apparent authority on the part of the person signing, the nondisclosure agreement will not protect you. Demonstration of the invention likely will immediately terminate your patent rights.
There is also the problem of proving that your non-disclosure agreement applies to a particular disclosure. If, for example, one of the corporation’s employees violates company policy and posts on his Facebook page: “I saw the coolest invention today” along with video of your invention, then it will very difficult to show that a similar invention in, say, a video from Kazakhstan was derived from your disclosure. That Kazakh video likely will be prior art for your subsequent patent application and may prevent you from obtaining a patent.
Bottom line: The safest approach is to file a patent application prior to disclosing the invention and certainly prior to demonstrating the invention or selling the product, coupled with non-disclosure agreements with the persons to whom you disclose. You then have the best of both worlds – you avoid loss of patent rights because your patent application is already filed and you enjoy the ability to immediately enforce the non-disclosure agreement without waiting for that patent to issue. We can help you with both your patent application and the non-disclosure agreements.
— Robert Yarbrough, Esq.