Anton Van Spaendonck – July 28th 2021 – When a company wants to protect its inventions, filing for a patent is seems the obvious choice. A patent can be filed for if the invention is new, industrially applicable and the result of an innovativeness. The patent protection then guarantees the right to use the invention commercially in a certain jurisdiction for a certain period of time.
Patents and inventions
However, a patent application involves formalities. These formalities may have a (serious) impact on the chances of successfully commercialising or implementing your invention. Your patent application will be published after a period of 18 months by the Belgian Office for Intellectual Property. Your competitors will thus be informed of the new formula or manufacturing process. Moreover, a patent has a limited validity period of 20 years, and you will have to pay certain taxes.
Moreover, not all “inventions” are necessarily susceptible for a patent. Of course, this does not mean that these inventions are not of commercial importance. People often wish to keep such inventions secret and/or protect the knowledge behind them.
It therefore happens that inventions are often not protected by means of a patent, namely because of the (non-advantageous) formalities or absence of the prerequisites for a patent. Nevertheless, there are a number of other means of protecting knowledge, creativity, or mental labour with the aim of preventing a company from losing its market advantage:
- The full disclosure of your invention, also called the defensive publication;
- During the period in which you wish to keep your invention secret, you can register it via the i-DEPOT envelope, to avoid later disputes about the invention or its date. However, this does not grant you any intellectual rights to your invention;
- Make use of a non-compete clause and/or confidentiality obligations, for example by signing a non-disclosure agreement (see below).
Non-disclosure agreements (also called “NDAs”) are agreements by which a contracting party, the information recipient, undertakes to keep certain clearly described confidential information absolutely secret and/or to use it only for specific purposes (and no other (!)). An invention and all related information, knowledge and documents can also be included in such confidential information.
With an NDA, your invention is therefore also protected (admittedly on a more limited scale) without your invention being published or disclosed (as in the case of a patent filing).
Moreover, an NDA can be for a long period of time and does not require payment of any taxes. It therefore creates an atmosphere of mutual trust, professionalism, and modalities by which the confidential information can be used.
The major disadvantage, of course, is that a mere NDA does not protect you in any way with any intellectual property rights. Moreover, another company may come up with the same invention on its own and acquire a monopoly on it through intellectual property rights. When choosing secrecy over a patent, one should therefore estimate the chance that another player will be able to obtain the same invention on his own.
The value of confidential information therefore lies in the fact that this information also remains confidential. A well-drafted NDA therefore plays an important role.
Essential elements in an NDA
An NDA should contain certain clauses and commitments to provide sufficient protection for the information provider. A detailled assessment should always be made, identifying the specific needs of the parties.
In any event, the NDA must describe:
- What the confidential information includes;
- Duration of the confidentiality obligation;
- The nature of the relationship between the parties (e.g., employer-employee, client-contractor)
- The permitted use of the information (e.g., for the purpose of producing a prototype, drafting the required technical plans and/or elaborating a marketing pitch prior to production);
- Compensation or settlement in the event of a breach of the NDA.
Moreover, an NDA can include a non-compete clause in favour of the information provider. Thus, the information recipient can be prohibited from using the confidential information for a competitive activity.
In this way, it can be ensured that not only the disclosure of the exchanged confidential information, but also the use thereof is further restricted and additionally sanctioned.
This can be particularly useful when certain service providers and/or employees are involved in the invention and/or the process. For example, the technical engineer in charge of the technical aspects, the subcontractor in charge of the production of a prototype, the marketing agency engaged in the pre-production branding process.
If you have to choose between a patent or contractual protection for your inventions, a clear assessment must be made of the advantages and disadvantages of both possibilities. If contractual protection is preferred in a concrete situation, it will always be necessary to thoroughly examine the precise scope and extent of the desired protection and the modalities to be linked to it.
Given the commercial importance of inventions and the underlying projects, it is best to determine in good time what your strategy will be in this respect.
Incidentally, it is not excluded that you combine a patent application with contractual protection of your invention (via an NDA). The fact that your invention and related know-how have now been disclosed does not mean that third parties can simply disclose the underlying marketing strategy.
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