Paranoia Power: Confidentiality Before and After Patent Filings
|Written by Gene Quinn
Patent Attorney & Founder of IPWatchdog
Zies, Widerman & Malek
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Posted: Mar 4, 2011 @ 3:52 pm
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Most inventors know that a healthy amount of paranoia goes a long way when dealing with an idea or invention. Ideas cannot be protected, so if you tell others they are free to use them unless they have signed an agreement saying they will pay you if they use your idea — good luck with that!
Inventions can be patented, but if you start telling others about your invention they could make and use your invention, which has immediate negative consequences for the patenting of the invention. Outside the United States most countries follow an absolute novelty standard, which means you need a patent application on file before any public activity associated with the invention. In the United States you would need to file a patent application within 12 months of public activity, such as a public use or offer for sale. Timing can be critical and keeping your mouth shut a very good strategy. But how much paranoia is too much paranoia?
You have to know who you can trust with your invention, and the short answer is not many people. This prompts many to attempt to secure a signed confidentiality agreement prior to disclosing their invention. By all means do try and obtain a confidentiality agreement if possible, we have free sample confidentiality agreements here on IPWatchdog.com that you can use at your discretion. Having said this, don’t be surprised if the other party does not want to sign. This is because prior to the signing of the confidentiality agreement no liability existed for the party receiving the information. After the signing of the agreement liability exists and there is no guarantee that anything of value has been conveyed in exchange.
For example, Sam invents a new and improved fly swatter. The fly swatter is virtually idiot proof and anyone can use it to kill flies no matter how uncoordinated. Sam wants to talk to Bob about possibly investing or partnering in the endeavor, and before Sam tells Bob anything he wants a signed confidentiality agreement. Bob has no idea what he is about to learn from Sam, maybe it is good, maybe it is bad, maybe he already knows the information. If Bob signs a confidentiality agreement he is immediately opening himself up to liability because he has promised to keep Sam’s information secret. If Bob already knew about Sam’s improvement to the fly swatter the confidentiality agreement he signed will almost certainly say he doesn’t have to treat Sam’s disclosure as confidential. But if you were Sam what would you think if 6 months later Bob starts selling a fly swatter that looks remarkably like yours? Sam will think Bob stole it from him and maybe litigation will ensue.
The above story is but one example of what can, and some frequently does, happen. Inventors frequently think what they have is so unique no one else could have ever come up with the invention without stealing it, but that is really rather naive. There are plenty of creative people who could and do come up with nearly identical inventions. Just hire a professional to do a patent search on your invention and that will become clear. And if Bob is an investor he has likely been pitched by many inventors, so it stands to reason that eventually two will have at least plausibly similar inventions. Thus, getting an individual to sign a confidentiality agreement can be quite difficult. Sadly, some of the invention scams gain your confidence by promising to sign a confidentiality agreement because they don’t plan on taking your invention, rather they plan on taking your money by selling you high priced services for an invention that might not be patentable or only capable of receiving extremely narrow patent coverage.
Just because getting a confidentiality agreement is difficult doesn’t mean that you shouldn’t try. There are those out there that are used to signing confidentiality agreements, such as manufacturers and engineers who you might need to work with to create engineering drawings and or a prototype. Whenever you are showing your invention to someone within your industry or to those who would have the technical knowledge and ability to move forward with your invention without you a confidentiality agreement is both essential and more likely to be obtained. Just don’t expect investors or potential licensees to be too interested in signing.
So what do you do? Many inventors will seek to obtain some kind of patent protection so they can stake their claim to their invention. This is a good strategy because when you file a patent application you are articulating your invention and getting on record with a filing date that cannot be taken away from you with respect to whatever is in your patent application. A provisional patent application can be a great first step particularly if you are going to need some assistance later to develop your invention because whatever is disclosed in the application is protected as your invention as of the filing date, assuming of course you ultimately get patent claims issued. It is also a good first step because you do not need a confidentiality agreement when dealing with a patent agent or patent attorney because the law already requires that information learned from clients or even prospective clients must remain confidential. So even if you just seek the advice of a patent attorney or patent agent and never wind up hiring them they are legally required to keep what you tell them confidential. That is the law and it is stronger than any confidentiality agreement you could ever have them sign. See Confidentiality Pledge.
After you have a patent application on file, even if it is a provisional patent application, the need to obtain a confidentiality agreement lessens, but it does not go away. The short answer is that you are always better off getting a confidentiality agreement signed whenever possible. The only caveat is that you do not need a confidentiality agreement when you are speaking with an attorney, and most attorneys simply do not sign confidentiality agreements and are invariably scared away from representing those who ask for a signed confidentiality agreement. It is simply urban legend that attorneys steal inventions. There has never been a single provable case of an attorney stealing an invention. It simply doesn’t happen and if you are caught up on an attorney signing a confidentiality agreement finding reputable assistance will likely be quite difficult. Those who worry about attorneys stealing inventions despite the legal requirements imposing attorney-client confidentiality are routinely viewed as probable prima dona clients that are likely to be problematic and perhaps even sue the attorney. Don’t present as a prima dona when seeking legal assistance, at least not if you want to obtain representation.
Back to the question at hand regarding the need for a confidentiality agreement post filing of a patent application. It is important to understand that no exclusive rights will attach to your invention unless and until a patent is actually awarded by the Patent Office. Filing a patent application, whether a provisional patent application or a nonprovisional patent application, is an important first step that works to legally define the scope of your invention, but no rights attach at the time of filing.
After you file a patent application you can use the coveted terms “patent pending” and this should scare away many, if not all, potential competitors. Typically no one wants to spend the time, money and energy associated with making and selling a product when a patent could pop up and be used to shut down the operation. Having said this, there is no reason that others could not use, make and sell your invention prior to the issuance of a patent. Additionally, if you file a patent application and inadvertently do not include as much description as is required and should be present you could significantly harm yourself by telling others about your invention without a confidentiality agreement in place. For example, if you tell someone and they engage in some activities, such as but not limited to writing about your invention, and you later realize that the original application was faulty you may not be able to file a new, updated application. This is particularly a concern if you filed a provisional patent application on your own, or used a bargain basement attorney.
As mentioned above, you need to realize that many people are just not going to sign confidentiality agreements. This is not necessarily because they plan on stealing your invention, but rather in many cases because if they sign they are creating liability for themselves. This holds true even after you have filed a patent application.
You can, however, with some level of assurance show interested individuals your patent application once you have filed the application. You are still better getting a confidentiality agreement if you can, but at least you have defined your invention and secured your priority date, which relates to whatever is present in the disclosure at the time you filed the patent application. So even if the person you are showing would be inclined to do something nefarious like rush to the Patent Office with your invention they could never obtain a priority date as early as the one you have. Of course, the sufficiency and comprehensiveness of your disclosure is critical. Don’t skimp on your first patent application ever! You cannot update your application unless you file a new application and if you leave something out it is out and not yours.
Despite these risks it is at least somewhat common to show serious investors the patent application you have on file. They might not want to actually see the application and instead might just ask you questions about it, but some will want to at least take a look. Others might want to talk to you patent attorney, or even see a patent search report of patentability opinion. Investors are notorious for not wanting to sign confidentiality agreements because they can talk to so many different inventors that they are bound to come across someone who could think that their idea was stolen.
So the moral of the story is get a confidentiality agreement signed whenever possible, but understand that to get the help of a reputable professional you may have to live with not having one. If you don’t have one and cannot get a confidentiality agreement signed you absolutely must file a patent application first, and you really should have professional help.
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Posted in: Educational Information for Inventors, Gene Quinn, Inventors Information, IP News, IPWatchdog.com Articles
About the Author
Gene Quinn is a US Patent Attorney, law professor and the founder of IPWatchdog.com. He is also a principal lecturer in the top patent bar review course in the nation, which helps aspiring patent attorneys and patent agents prepare themselves to pass the patent bar exam. Gene started the widely popular intellectual property website IPWatchdog.com in 1999, and since that time the site has had many millions of unique visitors. Gene has been quoted in the Wall Street Journal, the New York Times, the LA Times, USA Today, CNN Money, NPR and various other newspapers and magazines worldwide. He represents individuals, small businesses and start-up corporations. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.