Non-disclosure agreements are used when confidential information, such as details of an invention, is being shown by one party (the proprietor) to another party (a company or potential investor), and the proprietor wants to ensure that the information remains confidential.
From the proprietor's view, he has spent considerable time developing his product and has a personal stake in the success or failure of his work. He wants to persuade an investor or company to join him in the venture or perhaps purchase the rights to the product from him, but the proprietor may be concerned that his creation will be "stolen" if he tells the company about it. A properly drafted non-disclosure agreement can set out the scope of the relationship between the two parties. A non-disclosure agreement will not protect the proprietor, however, if the people he chooses to deal with are unscrupulous. The advice of an intellectual property specialist should be sought, and the appropriate patent, trade mark or other applications should be filed. The proprietor can then be reasonably assured that his work is secure.
From the company's view, many, although not all, are interested in receiving proposals from proprietors. Companies wish to protect themselves against litigation from disgruntled proprietors who may later claim that their ideas were stolen, when in fact they were already being independently pursued by the company. Companies often establish safeguards to protect their interests. Some companies may have all proposals reviewed initially by an assistant who has no contact with the product development team in the company. Alternatively, companies may refuse to sign any non-disclosure agreement submitted to them, but will forward their own agreement to the proprietor for him to sign. An intellectual property professional can advise the proprietor whether his rights would be in jeopardy.
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The comments contained herein provide a brief overview only and should not be regarded or relied upon as legal advice or opinion.
01/2007