As an inventor, one of the best ways to make money is to license your invention to other individuals or business entities. By shopping your invention around, however, you may be putting your rights to that invention in jeopardy. The more you reveal about your invention, the more likely it is that it will be stolen or copied. So what's the best way to protect your invention?
Patent Your Invention if Possible
Patent protection is significant, so if you think your invention is patentable, immediately file for a provisional patent application. Even the status of "patent pending" will often be enough to deter potential thieves and protect your invention, and it's important to establish your right to the patent as soon as possible.
Patent applications can be done by yourself if you have enough time and patience, visit the U.S. Patent and Trademark Office (USPTO) at for instructions on how to obtain patent protection for your invention.
Use Nondisclosure Agreements when Possible
Many inventions and ideas are simply not patentable, so the best course of action is to use NDAs when dealing with potential customers. NDAs also go by other names, such as disclosure agreements or confidentiality agreements. Upon signing a NDA, if a customer breaks any provision of the NDA, you can sue them to recover any damages caused by their breach of the agreement.
The critical portions of a NDA set forth:
1. Exactly what is and isn't confidential: NDAs define what is considered confidential and may include a section on what is considered a trade secret. NDAs also expressly exclude certain items from the definition of confidential so that parties aren't burdened with unnecessary obligations.
2. Obligations each party has to keep the information a secret: it isn't enough to simply say that something is to be kept confidential. NDAs specify the standard of care in keeping the item secret, and list out the obligations that each party must fulfill in order to maintain the confidentiality of the underlying information. Common examples of these duties include how information will be handled with third parties who aren't a part of the agreement, as well as setting forth how information should be handled and stored.
3. How long the obligations last: the party that wants the information to be protected will want a longer period of time, while the party encumbered by the NDA will want a shorter period of time. This is often one of the largest points of contention between parties and is usually resolved in negotiations. Common time periods within the U.S. are anywhere from 2 to 5 years. As an inventor, how flexible you can be is determined by how long you think it will take others to figure out your invention once people have access to it. If you think that others will begin duplicating your invention quickly, then a longer period of protection may not be necessary.
4. What happens if one party breaches the agreement: pay extremely close attention to what the agreement says happens in the event that one party breaches the agreement. Consider whether arbitration or alternative forms of resolution make sense, and whether the court of jurisdiction specified in the agreement makes sense for you. Large companies will often try to put in terms that are favorable to them, so always consider the worst case scenario and decide if it's ok for you to be forced into court across the country years down the road.
If You Can't Use a Nondisclosure Agreement
There are many reasons you may not be able to convince a potential customer to sign a NDA. If you can't get a customer to sign a NDA, don't just abandon caution and share your invention without restraint. Even without a NDA, there are still several steps you can take to protect you and your invention:
1. Investigate the customer's reputation: to really decide whether disclosure without a NDA makes sense, do some digging about your customer's reputation. If they have a solid reputation, then applying some of the following steps and a little common sense might make a lot of business sense. If a customer has a poor reputation and long history of litigation, then it may not be worth the risk.
2. Create a confidential business relationship: even if a business is reluctant to sign a NDA, some businesses might be comfortable with establishing a less formal confidential relationship. Even if a company is unwilling to create a written and signed confidential relationship, you can still preserve your right to claim a confidential relationship in the future if:
3. Disclose only the basic idea: a potential customer shouldn't be concerned with the details of your invention for the most part. Instead, most customers should be primarily concerned with what your invention does and how it can make them money. Accordingly, don't disclose the details of the invention or the critical components that make your invention unique, and be very skeptical of anyone who wants you to disclose everything unless they have a solid business reason.