Several days ago I was having a discussion with my good friend “Gizmo” about the origin of the “non confidentiality agreement". I had never even heard of this document before so he took a moment and explained it to me. Basically it’s a document a company has an inventor sign stating they will not assume responsibility for keeping your invention confidential, and the only rights you have to protection of your idea are those extended to you by way of your patent.
Having never heard of this document before (see…I don’t know everything) I wanted to find out more about it and why it’s used. So I did what I always do in cases of legal questions such as these - I asked my business partner Mark Smith -He's a Patent Attorney.
We had some time yesterday before our partner's meeting (one of our partners is always at least ½ late) so Mark was kind enough to give me the history on non confidentiality agreements - I thought I would pass that along.
It really did all start with the Toy companies – Years ago (early 80’s) the toy makers got hit with a rash of lawsuits accusing them of stealing ideas from inventors who had submitted them for consideration. Back then, you could simply mail your idea into a company like Mattel and if they liked it they would license it from you. This practice inevitably resulted in times where the inventor’s idea was similar to one the toy makers already had in development. A rejection letter went out to the inventor, and a few months later the idea shows up at the local toy store. Now you have an angry inventor, but a company that actually did nothing wrong.
The inventor sues the toy company and everyone ends up in court - where truth often takes a back seat to emotion. The toy companies had done nothing wrong, yet they were portrayed as taking this great idea from the poor helpless inventor. Play that in front of a sympathetic jury and the toy company doesn’t stand a chance. These companies were getting hit by lawsuit after lawsuit, and every time they were being hammered with huge jury awards.
After years of getting sued, the Toy companies struck back. Most stopped taking unsolicited inventions all together, and those who would, started using the “non confidentiality agreement" to put the inventor on notice that at the end of the day, the only rights they had dealing with that company were patent rights.
Other industries soon followed and over the years this has dramatically altered the landscape of how companies do business with inventors. Some simply won’t. While others make sure you have a patent in place so they can’t be accused of stealing the idea. while still others use the “non confidentiality agreement" as a way of making sure the inventor understands he/she may not be the only one who came up with that great idea.
I’ve been in business far too long to think there was never a toy company that didn’t rip-off an inventor…..I’m sure there was.
However, next time you want to send an idea to a company and they either won’t take it, make you have a patent, or they make you sign a “non confidentiality agreement". – Just remember, as an industry….we really did it to ourselves.
