1. NDAs for Patents
2. Risks of Not Having an NDA
3. Types of NDAs

An NDA patent is one of the most effective solutions for protecting your invention. If you're revealing your invention to potential investors, a non-disclosure agreement (NDA) can prevent your invention from being publicly revealed and copied.

NDAs for Patents

An invention non-disclosure agreement is a useful tool for preventing anyone from being able to steal your invention.

If you have an idea for a product, but have not yet executed the idea, an NDA can be very valuable. For instance, you may want to reveal aspects of your idea to potential investors, including:

  • An overview of the invention.
  • Strategies for creating and selling the product.
  • A prototype of your invention.

Having an NDA in place before you begin the patenting process will help you secure your invention. Before you reveal your idea, have the investor sign the NDA. The agreement should clearly state that the information you are revealing is confidential and that misappropriating the information may result in consequences.

Risks of Not Having an NDA

Revealing an idea or invention without an NDA in place can be very risky, and may even result in the loss of your ability to patent an idea. For instance, if you disclose your invention publicly before filing a patent application, you may lose your future patent rights. Fortunately, there are some exceptions to this rule. In the United States, for example, you have a one-year period from the first public reveal of your invention to the time you file your patent application.

With an NDA in place, you can reveal your invention without putting your patent rights at risk. Having someone sign an NDA and then revealing your invention constitutes a private disclosure.

Not having an NDA in place when you tell someone else about your invention means your idea could be easily stolen. If you disclose your invention to someone but don't make them sign an NDA, they could turn around and patent your idea for themselves, leaving you with little legal recourse.

Types of NDAs

If you want to use an NDA to protect your idea, there are two types of agreements that you could implement. The first is a one-way NDA. A one-way NDA is the most common choice when only one party is revealing private information, which would usually be the case when disclosing an invention. With this type of agreement, only information provided by the disclosing party has protection.

It's also possible to use a mutual NDA if both parties plan to disclose private information. Using a mutual NDA means that the information revealed by both parties will be protected by the agreement. A common reason to use this type of agreement is if you are negotiating a licensing deal with another person. Under such circumstances, you, the inventor, would need to disclose information about the idea, and the licensee may need to disclose his or her financial information. Having an NDA in place would provide a variety of benefits:

  • The other party would agree not to reveal information about your idea.
  • The other party would agree not to attempt to use your idea for their own profit.
  • You could receive advice about your idea without putting your patent rights at risk.

As you might imagine, there are also certain drawbacks to NDAs:

  • It can be hard to get investors to sign the agreement, especially if the protections are one-way.
  • The protections that you receive from the agreement will be limited.
  • NDAs can be circumvented in some circumstances.

One of the biggest issues with an NDA patent is that it can be extremely hard to prove that a breach of contract has actually occurred if the other party does steal your idea. For instance, they could state that they had already created something similar, and proving that they are lying may be impossible.

Seeking a remedy for a broken NDA can also be very costly. Not only will your lawsuit take a great deal of time, it can also be very expensive. This is especially true if the NDA has been broken by a large investment firm who has much more capital than you do. For these reasons, it is usually a good idea to only bring your invention to investors after you have patented your idea since patents provide much fuller legal protections than NDAs.

If you need help with an NDA patent, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.