An entrepreneur's first inclination is rarely to keep quiet about their latest and greatest idea. However, there are times when doing just that can pay significant dividends.
Any new and innovative product or service faces the threat of copying from competitors. To mitigate that threat, registered Intellectual Property such as Patent, Trade Mark or Registered Design protection provide monopoly rights which protect a product or service against imitation.
However, there are times when the protection conferred by registered IP rights is not the correct approach. Perhaps product development is at an early stage, or a company has yet to be formed.
Early stage discussions around new ideas and innovations should always be undertaken under the confines of a confidentiality agreement. This legal document would be signed by all parties involved in discussions and would prevent the party who receives the confidential information from making unauthorised use of it, or from disclosing it to third parties.
Showing diligence around Confidentiality can be an excellent way to highlight to a potential partner or investor that your business understands and is in tune with important commercial factors, as well as evidencing that you hold your company to best practice.
When sharing information under a Confidentiality agreement, you should request that, where possible, any disclosed information is returned to you once discussions conclude. That would include returning samples, prototypes or any paper documents (which should be marked "Do not copy", ideally in coloured text, in order to highlight any copying) as well as the deletion of any electronic documents. It is worth remembering that word of mouth discussions made under confidentiality are more difficult to both record and retract.
Specifically, you can discuss an idea that may be patentable under the confines of confidentiality without publicly disclosing that idea such that a patent could not be filed. However, bear in mind that while the confidentiality agreement would cover the specifics of what you have disclosed, it may not extend through to covering the general approach that you have used to solve a problem. That could leave a third party open to use such an approach to solve the problem in a related, but different way. Such subsequent innovation could fall out with the scope of the confidentiality agreement. Patent protection is far more effective at covering not only what you have invented, but variants of it.
Confidentiality agreements provide a quick and easy way to engage in discussions with third parties, but their limitations should be borne in mind.
Trade Secrets are similar to confidentiality, but relate more directly to keeping processes confidential within a company. Effective use of Trade Secrets are particularly evident in the food and drink industry. For over a hundred years, competitors have tried to imitate the flavour of Coca-Cola, but by keeping the recipe and formulation a closely guarded secret (often with one person never knowing the full recipe), competitors have tried and failed to replicate the product.
Gordon Stark,
Chief Operations Officer, Edinburgh
Murgitroyd
For more technical and legal expertise on all IP matters please visit Murgitroyd
