Updated November 24, 2020:

A nondisclosure agreement for product design, also commonly referred to as an NDA, is an enforceable contract that involves at least two parties. The agreement outlines confidential material and knowledge that the two parties want to disclose to one another but want to withhold access to by third parties. The NDA is also known as or referred to as a confidential agreement (CA), confidential disclosure agreement (CDA), proprietary information agreement (PIA), and a secrecy agreement (SA).

When Are NDA Agreements Used?

Doctor-patient confidentiality, attorney privilege, and bank-client confidentiality are common forms of entities that use NDA agreements. Confidentiality agreements are designed to protect sensitive information and to define what is private and what is unconcealed. NDAs basically shield private business information but can include concepts and ideas in the issue of patents, as well as client lists and passwords in various settings.

During product development, to prevent an invention, idea, or design from being shared with another person or company, an NDA will protect a designer's rights. NDA agreements are all unique, but there are two standard types of nondisclosure agreements. They are referred to as unilateral NDA and mutual NDA. The unilateral agreement obligates the recipient, also referred to as releaser, to keep any information disclosed during product development as confidential information. A breach of this agreement can be the difference between a product's development being successful or a failure. Another type of NDA is referred to as a mutual nondisclosure agreement. Both parties agree to not share the other's information.

What Is the Purpose of an NDA?

An NDA ensures the recipient is free to disclose details and how the product's development is progressing with the patenting or licensing divisions while still protecting the disclosing party's confidential information.

The timeframe of an NDA will be effective as outlined in the agreement, which is commonly the date it is signed. There are different options regarding how long an NDA will remain in effect. The agreement may specify a length of time, such as six years from the effective date. An agreement can be designed to expire at the end of the project's completion, or you may choose to hold the recipient to secrecy indefinitely.

What Steps Are Taken to Create an NDA?

Creating a new product development, also known as an NPD, can involve a great deal of time. There are multiple steps required and the entire process demands confidentiality. Even after the product is commercially available, the designer can still be in the process of NPD. Idea generation, concept testing, screening, marketability, metric monitoring, commercialization, and post commercialization are all part of the NPD steps to be taken. While NDAs are necessary at various times, each step does not require an NDA.

When deciding if an NDA is needed, there are two basic questions to ask yourself:

  • Can the concept be thoroughly explained and described without revealing specifics?
  • Are you starting off on the wrong foot?

If you feel like you can provide necessary information safely, you may opt to wait until product execution begins before requesting an NDA. To ensure an NDA request will not be taken as a trust issue, consider appropriate timing in the product development process.

As a good-faith gesture, it is not uncommon for professionals to propose an NDA to be executed or sampled to demonstrate the company's value and dedication to confidentially. Companies will often refuse to enter an NDA with a prospective client due to potential conflicts of interest with current clientele.

The Importance of a Patent Attorney When Creating an NDA

Due to uncertainty in knowing the risk involved and several complex details, a patent attorney can often be very resourceful in new product development attempts. Patent attorneys specialize in obtaining patents and work to ensure your invention is protected. In addition to protecting inventors' rights, the attorney will provide advice on design and trademarks, as well as handle third-party objections.

When choosing a patent attorney, do your homework and search for someone who has a broad knowledge and understanding of patents. Not only will a patent attorney work to obtain a patent for you, but they will also act to enforce the rights of your invention when and if they are violated.

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