Introduction to Nondisclosure Agreements
January 30th, 2010 Filed under: Uncategorized — Negotiation Author
It’s a terrific idea! A plush toy with the potential to become this season’s must-have and, eventually, a classic! To succeed at that scale, you can’t make it in your garage; you need a designer and manufacturer. But you’re concerned. What if this company represents your idea as its own? What if one of the artists refining your design steals it and sells it to a competitor? What legal protections ensure your idea remains just that-yours?
What is a Nondisclosure Agreement?
Fortunately, the United States legal system has several safeguards to protect intellectual property rights. One of these is the nondisclosure agreement (NDA), also known as a “confidentiality agreement.” This is a signed agreement between two or more parties which states they will keep confidential specific information shared during their business relationship, or in the course of a transaction. In the business world, an idea, formula, or process can be a company’s most important asset. The NDA ensures that a company or individual retains exclusive rights to their intellectual property. When you hire a company to manufacture your plush toy, an NDA gives you the assurance that your ideas (and profits) remain yours and legal recourse if it does not.
Types of NDA
There are two kinds of NDA. With a one-way NDA, only one of the parties is disclosing information. If you are hiring a company to produce your plush toy, but that company will not be sharing proprietary information (such as a secret method of stitching) with you, you may only need a one-way NDA. A mutual NDA is necessary when everyone involved in the process is sharing private information. If you sell a new manufacturing process to a soft drink company which shares a secret formula with you, you’ll both want a mutual nondisclosure agreement.
Contents of an NDA
A good NDA contains:
�Definitions of the shared information. For example, yours might include “the design for Skippy the Cat,” without describing the confidential information itself.
�Exclusions. Not all information needs to be confidential. This protects the recipient, in the event that it possesses or discovers information independently of its relationship with you.
�Recipient’s Responsibilities. Shared secret information must remain secret. Neither party can share it or use devious ways to steal it.
�Time Limit. Although you might want your idea to remain secret forever, this is not always going to be the case.
�Miscellaneous Clauses. These are various legal details, such as how a breach will be handled, who will pay attorney fees in the event of a lawsuit, etc.
You will find many NDA forms available online; the company with which you are contracting may offer one of its own. One caveat: be sure that the agreement suggested is not actually a waiver of protection. Such a document will contain phrases like “this does not constitute a confidential relationship.” However, as in all legal affairs, it’s best to review any agreement with your own attorney, even when you are sure the other party is acting in good faith. It’s just good business.
Rob E Bishop invites you to bring your stuffed toy invention idea to his website at CustomPlushToys.com where you can learn how to design, create and sell your own stuffed toy idea. Download his free report “Don’t Get Ripped Off” to discover the secrets of how to navigate the dangers in making your toy idea successful.
