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Non-Disclosure and Confidentiality

Written by: Ian Macleod

Article Overview: Suppose you are just getting to bed. All the day’s activities and tomorrow’s plans have finally managed to settle down to the point where you are almost able to fall asleep. Then it suddenly hits you: The single greatest idea since the invention of ideas! You get that flash of inspiration you know will turn your life on its ear and revolutionise the world. Congratulations! But now what? If your idea is half as great as you believe it is, how can you talk about it to someone and be sure they are not going to steal it for themselves? The answer is simple: you need a Confidentiality Agreement.

Non-Disclosure and Confidentiality

Suppose you are just getting to bed. All the day’s activities and tomorrow’s plans have finally managed to settle down to the point where you are almost able to fall asleep. Then it suddenly hits you: The single greatest idea since the invention of ideas! You get that flash of inspiration you know will turn your life on its ear and revolutionise the world. Congratulations! But now what? If your idea is half as great as you believe it is, how can you talk about it to someone and be sure they are not going to steal it for themselves? The answer is simple: you need a Confidentiality Agreement.



* WHAT IS A MUTUAL CONFIDENTIALITY AGREEMENT? Put simply, a Confidentiality Agreement is a written contract stating the people you talk to will not be able to take your idea and use it for themselves. Ideas have value, and your ideas are no different. A Confidentiality Agreement allows you to talk about your idea safely. A Mutual Confidentiality Agreement is simply an agreement that binds both parties.



* WHEN SHOULD I USE A CONFIDENTIALITY AGREEMENT? Since you can’t patent or copyright an idea, you need to be sure your ideas are protected. The best way to do this is with a Confidentiality Agreement. Whenever you have an idea you believe is valuable and you want to talk about it to another party, you need a Confidentiality Agreement



* HOW DO I ENTER INTO A CONFIDENTIALITY AGREEMENT? Whenever you plan to talk about your idea with someone, you should have them read and sign a Confidentiality Agreement. For example, let’s say you have come up with a great invention but you are not sure how to go about making it. If you go talk to an adviser to ask them what your next step should be, you need to make sure that adviser will sign a Confidentiality Agreement. If they won’t, it’s best that you move on.



* WHAT DO I NEED TO INCLUDE IN THE AGREEMENT? The agreement needs several clauses and conditions for it to be effective. First, you need to make clear what the person you talk to can and can’t reveal. Each party needs to know the information discussed is confidential, and that by revealing or using it, they will violate the contract. A good Confidentiality agreement will be precise enough to protect your ideas while being flexible enough to allow you the freedom you need to follow them.



* CAN’T I JUST MAKE AN ORAL AGREEMENT? Of course. But making an oral agreement and enforcing it are two different things. Oral agreements are all too often little more than paper tigers. A written agreement is the best way to protect yourself.



Coming up with a great idea or invention is just the first step. To be sure your idea is practical, you need to research, and research means talking to the right people. No matter if its an idea for a movie script, a new recipe or a better mouse-trap, your idea needs protection. There is nothing worse than coming up with a brilliant idea, only to see someone else reap the rewards because you didn’t take your own idea seriously. Ideas are big business. Even if it seems silly or slightly paranoid, you owe it to yourself to give your ideas the respect they deserve.

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Article Tags: adviser, clauses, confidentiality agreement, flash of inspiration, great invention, patent



Related Forum Posts
Patent Walk-Through - Hello everyone! My name is Alex, I'm 18 years old and I'm constantly drawing up new ideas and inventing stuff. I sketch stuff down everywhere I go and on anything I can write on. I'm a big member of our local Future Business Leaders of America chapter (FBLA). In the future I hope to work my way up to being a Venture Capitalist. I think of myself as a pretty creative person who is very motivated. Some of the ideas and inventions I come up with are pretty far out but others I consider marketable and to have great potential. Being 18, I have little to no connections and no resources. I've been surfing this site pretty frequently for the last year and have finally decided to join the forum group. Anyway, here's my question... Basically, I have no idea how to get a patent together the costs and the overall process. As of now, I think I have a great idea that, as far as I know has not, ever been done before. I'm really excited about this idea. I'm a total novice at this and am willing to learn all that I can. Any information that you can provide me with would be great. Again the main things I want to know are: 1.Overall Process. 2.How Long It Takes. 3.Costs. 4.Anything That You Think I Should Know. 5.Tips/Experiences. 6.Confidentiality. 7.Must I Make A Physical Model of My Idea? Thanks guys! -Alex
Re: Template of Service Agreement/Contractor Agreement - Shimmy- I, too, would be happy to share my template contract for a service provider. But beware, a template agreement may not be sufficient to properly address your needs. Some key differences between Employees and Service Providers: 1. Tax Status. Employers are responsible for withholding tax on employee's earnings. Independent Contractors are responsible for reporting their income/taxes. There is a significant reporting burden and liability associated with this. 2. Confidentiality/Intellectual Property. Often times, employee handbooks will specify an employees confidentiality obligations and many states impute a duty of loyalty. Contractors are under no such obligations absent a written agreement. Same thing for IP/Creative works. The copyright Act draws a sharp and significant distinction between employees and contractors when it comes to ownership of creative works. 3. Liability for tortious acts. Generally an employer is liable for the tortious acts of its employees under the theory of respondeat superior. An entity hiring a contractor may/may not be liable, but without a written agreement for the contractor to indemnify/defend the hiring entity, their may be little recourse against the contractor. There are many other subtle differences too numerous to mention. I hope you find this helpful.
Re: Template of Service Agreement/Contractor Agreement - [quote="Dave_Adler":21fe7egl]Shimmy- I, too, would be happy to share my template contract for a service provider. But beware, a template agreement may not be sufficient to properly address your needs. Some key differences between Employees and Service Providers: 1. Tax Status. Employers are responsible for withholding tax on employee's earnings. Independent Contractors are responsible for reporting their income/taxes. There is a significant reporting burden and liability associated with this. 2. Confidentiality/Intellectual Property. Often times, employee handbooks will specify an employees confidentiality obligations and many states impute a duty of loyalty. Contractors are under no such obligations absent a written agreement. Same thing for IP/Creative works. The copyright Act draws a sharp and significant distinction between employees and contractors when it comes to ownership of creative works. 3. Liability for tortious acts. Generally an employer is liable for the tortious acts of its employees under the theory of respondeat superior. An entity hiring a contractor may/may not be liable, but without a written agreement for the contractor to indemnify/defend the hiring entity, their may be little recourse against the contractor. There are many other subtle differences too numerous to mention. I hope you find this helpful.[/quote:21fe7egl] I was thinking these same points as I was reading the earlier posts. I've been working with independent contractors for years - first as one, and then hiring many of others. These are three of the key things to be sure you include in your agreement. If they are truly an independent contractor, they are reasonable to handle their own taxes. I always include a confidentiality clause and very few have tried to break it. Liability can be a huge issue, depending on the sort of business you are in. In the US - there are all sorts of tax rules for state and federal government to distinguish if a person is or is not an independent contractor. If you make the wrong choice there are all kinds of penalties to be paid. Another thing that should be considered is that your business worker's compensation and/or liability insurance may have to cover these people. I know in construction, I'm charged for any independent contractor and their employees if they don't have their own insurance. That can get really pricey. If you're in a similar situation, talk with your insurance company, some will allow an independent contractor to sign an agreement that they will waive your responsibility to insure them. You would still need to pay for their employees, but it does save some money during an insurance audit. Chris


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