Do I need a signed NDA before I show my idea to someone?
The subject of nondisclosure agreements is unfortunately complicated. It’s not immediately clear that an NDA will guarantee the protection of your product idea in the long run.
We recommend that you file a provisional patent application before you show your product to anyone. Don’t rely on an NDA, because publicly disclosing your invention prior to securing the protection of a patent pending status can hurt your chances of receiving a patent and you run the risk of having to prove your ownership in court.
An NDA can be very helpful when you have an idea that cannot be protected with traditional intellectual property or if you have trade secrets.
Most potential licensees will not sign your NDA. They will want you to sign theirs. In that event, we strongly suggest you have an attorney review the document. Never sign an agreement before reading it. Sometimes, a document will be titled “nondisclosure agreement” or “confidentiality agreement”, but the actual terms of the contract establish the opposite.
What is an NDA?
NDA stands for Non-Disclosure Agreement. It is also known as a Confidentially Agreement (CA), Confidential Disclosure Agreement (CDA), or Proprietary Information agreement (PIA)
These agreements are legal contracts between at least two parties who want to share confidential material, knowledge, or information with one another, but wish to restrict access to and by third parties.
This type of contract usually specifies the information to be guarded and the conditions under which the parties agree not to disclose it. An NDA creates a confidential relationship between the parties to protect confidential and proprietary information, which includes non-public business information and trade secrets.
There are three general types of NDA:
- Unilateral: sometimes referred to as a one-way NDA, this involves two parties, where only one party, i.e. the disclosing party, anticipates disclosing certain information to the other party, the receiving party, and requires that the information be protected from further disclosure.
- Bilateral: sometimes referred to as a mutual NDA or a two way NDA, this involves two parties where both parties anticipate disclosing information to one another that each intends to protect from further disclosure.
- Multilateral: this involves three or more parties, where at least one of the parties anticipates disclosing information to the other parties and requires that the information be protected from further disclosure by everyone else.
I found a product that’s similar to my idea, what should I do now?
Actually finding a similar product to yours can be a good thing. It means there is a market for this type of idea. But you must determine if you have a point difference and that is marketable and something that can potentially he protected.
When you discover similar prior art, you can design around the patent and use what you find to write yours differently, especially if the patent isn’t very strong. You will need to narrow down how your innovation differs and why it deserves to be patented.
On the other hand, you can contact the inventor to try to license the idea from him or her, if the patent hasn’t expired or you could just walk away right then and there.
We can almost guarantee you will find a similar product idea. Good ideas don’t emerge out of thin air. They improve upon what’s come before them. If you have any doubts we highly recommend working with a good patent attorney to determine what your next steps should be.
What can I do to determine if I have a marketable idea?
The way inventors feel about an idea has a habit of overriding critical analysis. Many inventors charge ahead blindly, not really understanding what makes some ideas more challenging to market than others. Simple ideas take less time, money, and work to bring to market. So it’s no surprise more often than not, simple ideas are the most successful ideas.
Is your new product idea worth investing in? Take the following into consideration to help you make an evaluation. If it passes, move forward with it. But if it doesn’t, you might be better off abandoning or seriously altering it. Ask yourself the following
- Does your idea solve a problem? Can you identify the problem your idea solves in a sentence? Can you describe how your idea will solve that problem? Who will your solution help? How many people could it help? Will these people pay to have the problem solved? Not all product innovations solve problems, but many of them do. Maybe you’ve thought up a unique, interesting idea. But is it really relevant? If you cannot concisely identify how your idea is useful or beneficial, there’s a good chance it might not be very compelling. Consumers have an abundance of choices. Why would someone choose your product idea over another?
- Is manufacturing your idea going to be complicated or straightforward? Remember, the first two questions a potential licensee is going to ask you are, “How can we make it?” and “For how much?” First and foremost, does the technology needed to manufacture your idea exist today? If new technology is needed to manufacture your idea, potential licensees/investors are going to be turned off by that. So, take a look around. Do products similar to your idea exist? If so, that’s a good sign. If your idea is more technical, you’ll need to do more research.
- Does your idea have a wow factor? How is your concept going to stick out? Think about the type of person who would buy it in a store. What are they going to be intrigued by? What about it sizzles?
- Is your idea easily understood? When you try explaining your idea to other people, do they get it? Ideas that are too new, different, or complicated may require educating consumers about how they work and why they’re beneficial. Because education campaigns are so expensive, ideas like these are risky.
- Does it have mass appeal or is it a niche market idea (which appeals only to a very small and specific group of people)? Who buys similar product and what do they pay for them? Is there enough demand for it to be mass produced?
- Is it patentable? Some industries care about patents. Others don’t. Benefits sell ideas, not patents. In most cases, just the perception that an idea is patentable is enough to get you where you need to be, but you should still be aware of the landscape before talking to investors or to potential licensees. We also recommend looking on the Internet and visiting stores for similar products. Before you start is very important to study the marketplace. By looking at similar products you can determine if your product idea has a point difference worth pursuing and get an idea for its potential target audience and price.
Why would a company pay me for my idea? Wouldn’t companies just steal ideas from inventors?
In today’s world companies have to innovate to stay competitive, so they’re always looking for good ideas and it is in their interest to be in good standing with inventors.
I’m sure you’ve heard stories about company stealing ideas, and yes! It has happened. But this is not the norm. That being said, it’s very important to do your homework on any company that you are working with to make sure they are inventor-friendly. Here are some things you can do to proect yourself from unscrupulous actors:
- Find companies that are willing to accept outside submissions.
- When reaching out to them, make sure you ask about their process to find out how do they work with outside product developers/inventors. Clear procedures are usually a good sign.
- Get recommendations from other inventors about the companies that are inventor-friendly.
- Google anyone’s name then complaints or lawsuits. It’s up to you to do your homework. There will be many situations where companies will have worked on a project similar to yours.
We recommend finding good companies and submitting effective marketing materials that show the benefits of your idea. If they ask for additional information, then that would be a good time to ask for an NDA. Typically they will not sign yours, so you’ll need to review and sign theirs. Make sure to read all the fine print, and if there is something you don’t understand, have a patent attorney look at it.
What to do when you have a new idea for a product or service and you want to take it to market?
The first step is to educate yourself. And we highly recommend you find your local inventors group. Your local inventors group typically holds meetings once a month to help educate you to the process of commercializing your ideas. Please take a look at our map to find the nearest one to you.
But for now take a deep breath. It seems extremely daunting but it can’t be done. Historically what is been taught is that in order to launch a product or service you need to start a business. It’s called venturing. It definitely has its pros and cons which we will discuss later. The other option is to license your product or service for royalties. These two methods are completely different from one another and require a different set of skills, time, experience and investment.
- Manufacturing and marketing your own invention: This typically means that you’re starting a business. You will have to design, prototype, manufacture, warehouse, fund, market, distribute, and invoice your new product or service. You will have to wear many different hats. Most individuals don’t realize the amount of money, time, and experience it takes to successfully run a business. We will provide some handy links to get you started. We highly recommend that you take the time to educate yourself on the total process which includes writing a business plan and establishing a supply chain. It’s an extremely exciting and worthwhile goal, but at the same time there are many risks associated with bringing a product to market on your own. Pro tip: Having to purchase your order or showing demand from customers is a great way to eliminate the unknown in regards…will people purchase it. You will hear many success stories but there’s also many Failures were people end up having inventory in their home office or garage they cannot sell.
- Licensing your idea for royalties: to license your idea out is to give a company the rights to sell market and manufacture your product idea or service for an established period of time. The advantage is that they do all the heavy lifting in order to market and distribute wour product. Usually, this requires a good idea that has “perceived ownership” in the form of a utility patent, a design patent, a provisional patent application, a trademark, or a copyright; It could even include a trade secret. There’s very little financial risk involved, but in many situations you will need to build a prototype and generate good marketing materials explaining the benefit of your product or service. Licensing is becoming extremely popular, given that companies are increasingly accepting ideas from independent product developers and inventors. This model is called open innovation.