Posted: Friday, 23 December 2011 @ 16:23
You’ve got a great business idea - are you going to give it away for free?
Have you just had a ‘light bulb’ moment when an idea for a great new business, product or service came to you? If so, your natural inclination is probably to go and share your brainwave with someone.
Don’t do it! At least, not until you have a proper confidentiality agreement in place to protect it.
The same warning applies if you’ve spent ages developing your idea and now want to reap your rewards. You might want to sell the idea to a manufacturer. Or perhaps you need input from a designer, producer, distributor or other technical or commercial advice to get the idea to market.
The last thing you want is for someone else to get the benefit of all your hard work whilst you miss out. But that’s exactly what can happen if you tell anyone else without the protection of a thorough confidentiality agreement signed by the person to whom you propose to disclose your idea before you disclose it.
The key points you need to consider in relation to a confidentiality agreement– also referred to as a non disclosure agreement or confidentiality undertaking - to protect your idea include:
• Who will be receiving the information? You need to get the correct person(s) to give the undertaking to you, so check carefully whether you will be dealing with one or more individuals, a company or group of companies. Make sure you get the appropriate signatures and that employees, consultants and so on are covered where necessary.
• What confidential information will you be disclosing about your idea? This needs to be identified so that it will be sufficiently clear what is covered – but without actually giving away the confidential information before the agreement is signed.
• What will the recipient be allowed to do with your idea? Make it clear what can be done with what you disclose and – possibly more importantly – what cannot be done. For example, if the disclosure is purely to enable your idea to be evaluated with a view to the recipient buying the rights from you or taking a commercial licence, then you will need to spell out the limitations clearly, so that you protect your position for future negotiations.
Other matters that you will need to consider how long the agreement will last, when or how it will end, what will happen to any records of your idea, or copies of any designs or other materials. I wrote not long ago about some of the issues to consider in relation to these agreements - Getting to grips with the importance of Non Disclosure Agreements .
If you would like further information about confidentiality agreements please contact me.
Commercial Solicitor, Birmingham
Tel: 0845 003 5639
For free advice on this topic please call us on 0845 003 5639.
Blog by Sue Mann
Sue is an experienced commercial solicitor based in Birmingham from where she helps businesses all over the country advising on, drafting, and reviewing business contracts and commercial agreements. View profile
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