#101 Series: Protecting Your Ideas: An Introduction to Non-Disclosure Agreements

One of the aims of this blog is to aid the understanding and creation of Intellectual Property (IP). Intellectual Property refers to creations of the mind that may be transformed into a functional, visual and/or artistic form for the benefit and enjoyment of others.  One of the key goals of Intellectual Property Law is the protection of ideas by the owner.

Ideas may be protected by various means; by copyrights in the case of a literary or artistic work, by a patent- if you are an inventor who has created a functional product, a trademark   for your logo, product or cartoon character, or by a registered design for the way   a product looks.

Regardless of what type of intellectual property you are protecting, there will be a need to share your ideas with some people such as investors, technical partners or promoters, before the product gets to the market.   At this stage, issues like confidentiality, non-circumvention and non-disclosure become important.

Many years ago, I submitted a proposal to a Finance Company in response to an open Request for Proposal (RFP).  The lady who received my proposal was really pleasant, and I was really hopeful.

After awaiting feedback for what I figured was too long a time, I decided to approach someone in the company who ought to know about the RFP. He came back to me saying he didn’t find my proposal in all the submissions. However, he saw a proposal which was almost identical to mine (as per the copy I showed him), and it had been submitted by a company the husband of the pleasant lady worked for.

Stories like this abound from the private to the public sector, but how do you protect your idea as you share it with prospective partners, investors or promoters, before it gets to the market?

A Non Disclosure Agreement is one generic way in which you can do this, regardless of what type of idea you have.  Below are a few things you need to know about NDAs.

· A Non-Disclosure Agreement covers proprietary ideas and secret information shared between parties. It typically requires the receiving party to maintain information in confidence when that information has been directly supplied by the person sharing their idea or information (Disclosing Party).

·  An NDA may be one-way (Unilateral) or mutual. A One-Way NDA is usually given by one party to another,e.g. to an employee by an employer or research institution to researchers, barring them from disclosing confidential information. In the case of a mutual NDA, the terms of the agreement are equally binding on both parties, it assumes at the outset that  both parties MAY share confidential information in the course of doing business, thus, they are both disclosing parties and receiving parties.

·  Important elements of a Non-Disclosure Agreement include a definition of confidential information, purpose of business necessitating the sharing of information, limits on information deemed confidential (e.g. information that is in the public) and the duration of the duty to not disclose, this must be long enough to protect the disclosing party, (usually between 3-5 years from date of agreement).

·  An NDA is not fool proof; it may not stop the receiving party from going ahead to circumvent or disclose the idea or info, therefore it’s important that you manage the information you disclose, do not give out more than is necessary. Try focusing on the “why” and “what”, and reveal little about “the How” as that is usually where the innovation and IP resides.

   Sometimes, you may not have the opportunity to sit with the receiving party to enter an agreement, such as in the case of a bid, where you have to submit a proposal, to a pleasant lady, receiving on behalf of the company. What to do? You could write a short Non-Disclosure or Confidentiality statement, just after the cover page of the proposal. 

Ensure that a you get an acknowledgement. This would at least put the other party on notice about confidentiality, it might have a frightening effect giving them second thoughts about stealing your idea. In the event that they go ahead to breach confidentiality and disclose to another party, say their husband, who works for a competing company, you would have further basis for making a claim.

Check out the Adelphi Slideshare page for samples of a Confidentiality Statement (here), a Unilateral Non-Disclosure Agreement (here) and a  Mutual Non-Disclosure Agreement (here)

© Ese Oraka

Image Credit: edupics.com

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Ese Oraka is a Lawyer and Business Designer. He has extensive knowledge and experience in IP and Business Law, Innovation Management and Business Model Design. He is a founding partner at Adelphi Consulting. You can find him on - Twitter: @eseoraka, Facebook: /ese.oraka.9, or email info@adelphionline.com