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2011.03

The Inventor's Mentor

March 2011

Defensive Publications, Trade Secrets, NDA’s and Time Stamping



Patents are not the only method of protecting intellectual property. Other methods include Defensive Publications, Trade Secrets, and Non-Disclosure Agreements.

 

Defensive Publications

The inventor can preempt anyone else from patenting his invention by publishing a detailed description of it. In doing so he loses all exclusive rights to it, and so does everyone else. The invention enters the public domain and can be used freely by anyone. There are many reasons why someone may use this approach. For example the owner of an idea may have no business incentive to market a cure for disease afflicting an underdeveloped country because the profits would be too small. Instead, he may decide to make the cure public for the purpose of generating goodwill for the company.

Yet another reason for publishing an idea without a patent is if the marketing time window is very small. For example, the idea may involve a fad, such as a line of fashion with an estimated lifetime of a few months. This is too short for a patent to be awarded and generate revenues.

A more sinister reason for making an idea public is to impair a competing company suspected of employing the idea as a trade secret in the manufacturing of a product in which the inventor has no interest. Making the idea public can open the floodgate of competition against the competitor and reduce its resources and ability to compete against the inventor.

 

Trade Secrets

Alternatively, an inventor can protect an invention as a trade secret. To qualify as a trade secret the invention must not be generally known to the public, must provide an economic advantage to the owner over competitors or customers, and must be subject to reasonable efforts to maintain its secrecy. He can protect its confidential information through non-compete and non-disclosure contracts with its employees or consultants. In addition, the owner must be actively using it, otherwise the invention is considered to be abandoned and the inventor automatically loses all rights to it. An example of a trade secret is the Coca Cola formulation.

Trade secrets arise out of state laws and not out of federal laws. Most states have adopted the Uniform Trade Secrets Act (UTSA). Only Massachusetts, New York, New Jersey, North Carolina, and Texas have not adopted the UTSA. So, the law may vary slightly from jurisdiction to jurisdiction.

The law of protection of confidential information effectively allows a perpetual monopoly in secret information. Therefore trade secrets do not expire as do patents. However, the lack of formal protection also means that a third party may independently duplicate, use and patent this information.

What if this third party now sues the original holder of the trade secret for infringement? The original holder can defeat the lawsuit by showing that he knew of, and was using the invention all along, before the patent was filed, and therefore that the patent owner is not the first inventor of the invention. The patent would then be declared invalid and enter the public domain for everyone to use freely. The Coca Cola Company may be facing this situation if the recipe in inventor John Pemberton's papers is found to be authentic.

Non-Disclosure Agreements

Another method of protecting intellectual properties includes Non-Disclosure-Agreements. An NDA is a legal contract between at least two parties that specifies confidential information that the parties wish to exchange, usually for the purpose of entering a business relationship. In an NDA the parties agree not to disclose this information to any third party.

NDA’s can be unilateral, meaning that information is transferred in only one direction, or mutual, when information is transferred both ways. Often, companies require employees to sign NDA’s as a condition of their employment.

 

Companies deeply knowledgeable in the technology of an invention may not be willing to sign an NDA with an inventor because the NDA may represent an obstacle to their own research. In this eventuality, the best approach for the inventor is to file a provisional patent application and then transmit information to the company. This application is proof that the inventor is the first one to have conceived of the invention.

An example of NDA can be found at Patents and Ventures.

 

Time-Stamping and Document Registration

Other methods of proving inventorship include document registration and time stamping. In document registration as offered by Creative Registry, the document is uploaded to a web site and kept there until the need arises to prove inventorship. In time stamping, a software application appends a non-modifiable time stamp to a document to certify that this document was generated at a particular date. Companies offering this service include Read Notify and Secustamp.

Such protected documents do not constitute patent applications and may be voided if the inventor cannot show due diligence in pursuing the invention.

 

For archived newsletters and a lot of information for the small inventor go to: www.patentsandventures.com.

If you have any question you can contact me at (858)259-2226 or email me at glevy@patentsandventures.com.

This newsletter should not be construed as being legal advice. ©2009 by George Levy

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