Tag: intellectual property for small businesses

8 Key Components to a Solid Non Disclosure Agreement

Greg HarrisLeave a comment

Generally a prospective business partner will not share confidential information with you until both parties sign a Confidentiality Agreement or Non-Disclosure Agreement (“NDA”), and neither should you. A client recently asked me to provide it with the main points to consider when reviewing and NDA or Confidentiality Agreement. Here is a quick overview of the key provisions to watch out for.

  1. Err on the Side of Mutuality – In the event you receive a “One-Way” Non-disclosure agreement, always insist on it being made into a “Mutual” NDA. Always protect your confidential information and trade secrets with Mutual NDA’s.
  2. Distribution of Confidential Information – Always consider who will be reviewing confidential information. Consider whether it is prudent to include representatives such as brokers, accountants and attorneys, and financing sources like banks.
  3. Excluded from Definition of Confidential Information – A listing of Exceptions to “confidential information” should be included such as generally accepted information or information that has already been disclosed. Consider whether you want to name this partner or client as a partner or client in marketing materials.
  4. Standard of Care – You should never agree to keep the other party’s confidential information “strictly confidential” or “in trust”. This raises the level of protection you are required to provide.
  5. License of or Restrictions on Use of Your Intellectual Property or Trade Secrets. You should never agree to any restrictions on your use of your own intellectual property or licenses to use your IP or trade secrets for evaluation.
  6. Employee Solicitation – Certain parties will broaden the reach of their NDA’s by including non-competition and non-solicitation clauses. Never agree to these restrictions.
  7. Termination – A provision of termination should always be included, and it should state that the agreement shall end somewhere between 1 and 5 years from the date.
  8. Governing Law – Always have governing law be in your state. Delaware is also acceptable. Caution should be exercised if another state is chosen; particularly if that jurisdiction does not have a connection to your proposed transaction.

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Those are the Top 8 terms typical to an NDA Agreement. If you are specific, thorough and forward thinking when devising your NDA, or working with your attorney to do so, then you will have a worthwhile and binding contract that will help you protect your business exponentially. Lack of proper terminology or omission of crucial elements could lead to the demise of your business, so take caution and enlist legal advice.

THE JUGGLING GAME AND HOW TO PROTECT YOUR INTELLECTUAL PROPERTY

Greg HarrisLeave a comment

It doesn’t matter if you are a hot technology start up, a small food services business with an interesting recipe or a services business with a new business idea, legal protection of your intellectual property is critical to your business and should be one of the first things you think about when you’re ready to embark upon your new adventure. And this is one of the balls you need to juggle when you first start out.  Intellectual property generally falls into four principal categories – patents, copyrights, trademarks and trade secrets – and is fraught with misinformation.

three women and two men watching on laptop computer on table

For instance, a client recently asked me about copyrighting her business idea.  And another client wanted advice as to how to protect his trademark because of his patentable device.  Neither of these protections are possible, but the misinformation generally associated with intellectual property makes believe that they are.  This blog attempts to demystify it.

Copyrights.  Copyright protection is available for original works of an author and only protects the manner in which an idea is expressed.  If you have a distilling recipe for a banana liqueur, you don’t obtain a copyright for it unless the recipe is stylized in narrative format.  Besides, copyright applications are public records so your delicious recipe can be copied by all those who review the copyright rolls. On the other hand, if you have a computer program, work of art or literary piece, copyrights may be available.  Copyright registration using the primary registration method costs $35 on the main registry and generally takes 6-8 months.  You need to go through it though to protect your work.

Trademarks. Trademarks and servicemarks identify the source of the product or service (e.g., the brand name). It can also protect your logo or a tagline.  The major purpose of trademark law is to prevent confusion among consumers as to the source of goods or services and can exclude others from using the same or similar marks. That is one of the concepts that I always try to drive home.  Even if it is not an exact match, does your trademark cause confusion in the marketplace because it is so close to another trademark in the same industry?  That’s why doing a search of your mark is the first thing I tell my clients to do.  Even though trademark registration can take place federally or at the state level, I always recommend getting Federal protection given how often our goods and services cross state lines these days.  Trademarks cost between $300-$400 in filing fees and also take 6-8 months.

Patents.  A patent is a legal monopoly granted by the federal government to an individual inventor allowing the inventor to exclude others from making, using, or selling the invention during the life of the patent. Patent protection is available for any product, process, or design that meets certain requirements of novelty, non-obviousness, and utility. U.S. patent protection lasts for 20 years from the date on which the application was filed, with the exception of design patents, which last for 14 years from the date the patent was granted.  In the United States, a patent application may be filed no later than one year after a description of the invention is published, or the invention is first put on sale or made available for commercial use. Be careful though to obtain patent protection in all jurisdictions your idea may be used in order to maintain protection overseas.  Patent protection can take a long time to prosecute and cost thousands of dollars.

Trade Secrets.  A trade secret is any information, formula, pattern, or device used in one’s business that gives a competitive advantage and is not generally known within the industry. It must be of continuing use and must be kept confidential. This last requirement is extremely important, because once the information is no longer secret, it is no longer protected. A person or company claiming a trade secret must use reasonable and active procedures and controls designed to prevent disclosure and misuse. Leaving confidential materials lying around or within easy access can result in forfeiture of trade secret protection. Total or absolute secrecy, however, is not required. A trade secret can be communicated to employees who must use it, and it can be assigned, licensed, or otherwise disclosed to other persons who are required to maintain its confidentiality.  If material is known to some part (but not all) of the industry, trade secret protection may be available.

Other Considerations.  Other lesser known caveats of this type of protection include the following:

  • More often than not, it is the employer who is the owner of intellectual property on a work created by an employee in the course of his or her employment. If the creator of the work is not an employee, he or she will own the copyright unless the work was created within specific statutory categories of works as a “work for hire” under a written contract which details the work produced was done so and commissioned by the company.
  • Before engaging prospective lenders, investors, employees, consultants, suppliers and vendors (really any third party), you should obtain the recipient’s agreement to maintain the information in confidence via a separate NDA or confidentiality agreement. This needs to be done prior to any disclosure of your business.
  • If a formal NDA is not in the cards, then you should always at the very least add a statement that the information being disclosed in “Confidential.”

With these pointers, you will be positioned for IP success. And while this information is readily available and easily researched, it doesn’t match the expertise that an attorney  could offer your business. After all, you want to do whatever you can to make sure that your best ideas remain just that – yours.