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Patents
What is a Patent and How Do I Obtain One?
I. REASONS FOR OBTAINING A PATENTPatents are often the best means of protecting the assets of a business. Obtaining a patent (or in some cases even applying for a patent) can be advantageous. This is especially true in a competitive industry and when a considerable investment is made to provide tooling and expertise to manufacture a product. Patents deter competitors from taking advantage of another person’s efforts. For a limited time the patent owner should be able to enjoy the benefit from the invention. Patents are also useful in business for bargaining position. Like other forms of property, patents can be bought, sold, leased (licensed), and given away.II. DEFINITION OF A PATENTA patent is a document which fully discloses an invention and establishes the rights of an inventor. The patent gives the owner the right to exclude others from making, using, or selling the invention for a limited time, i.e., twenty (20) years. Patentable subject matter is defined as a process, a machine, an article of manufacture, or a composition of matter.
III. INVENTORSHIP

U.S. patents are granted only to the true inventor. The correct listing of inventors is very important for the patent application. Patents have been invalidated for failure to name the proper inventors. Inventorship occurs when the inventor is the first to conceive the invention. “Conception” is defined as the information in the mind(s) of the inventor(s), of a definite and permanent idea of the complete and operative invention. One cannot become an inventor by suggesting a desired end or result, without suggesting a way to accomplish that result. One also cannot become an inventor by merely following the instructions of the person or persons who conceive the solution. If two inventors independently invent the same invention, the U.S. patent will belong to the person who was the first to conceive the invention as long as the inventor is reasonably diligent in reducing the invention to practice and does not suppress, i.e., hide, the invention. This is true even if the second inventor was the first to reduce the invention to practice or file a patent application. A joint invention occurs when two or more persons, working together, each contributes to the “conception” of the solution to a problem that constitutes the invention.

IV. PROVISIONAL APPLICATION

A Provisional Patent application requires the filing of only a specification made in the name of the inventors along with a minor filing fee. The provisional application establishes a date of priority for the invention. A provisional application cannot mature into a patent, and it is not examined and cannot claim priority of an earlier application. The U.S. Patent and Trademark Office keep a provisional application in confidence. The provisional application will automatically go abandoned by law one year after filing. The filing of a provisional application provides up to twelve months to further develop the invention, determine marketability, acquire funding or capitol, seek licensing or seek manufacturing. A regular U.S. Patent Application may be filed and relate back to the priority date of the provisional application.

V. OBTAINING A PATENT

Obtaining a patent involves following an established procedure prescribed by the United States Patent and Trademark Office (PTO) that takes approximately eighteen months to two years. In order to understand this procedure, it is important to be aware of the requirements that must be satisfied. The most important requirement is that the invention must be new and nonobvious. In other words, the invention cannot have been disclosed in the prior art (issued patents, journals articles, etc.), or have been obvious to create by combining prior inventions or their disclosures.

VI. RECORDS OF INVENTION

The inventor should make careful records of the invention, including sketches, drawings, and written descriptions. At least two witnesses who understand the invention should sign and date the disclosure papers as early as possible. All records should be carefully guarded.

VII. LOSS OF RIGHTS

Patent rights may be lost by a sale, offer for sale or a public disclosure of the invention more than one year before the patent application is filed. Sometimes even a minor public use or even a “secret” use may constitute public disclosure.

VIII. PATENT SEARCH

To determine if an invention is new and non-obvious, a search should be conducted in the PTO to locate all patents and articles that are similar to the subject invention. Although not infallible, the search is a good and relatively inexpensive way to determine the prospect of obtaining a patent on the invention. If we find that the invention is old, we will recommend that a patent application not be filed because the PTO would probably reject such an application. On the other hand, if we do not find sufficiently similar references in our search, we would recommend that a patent application be filed on the invention.

Our opinion is based on a search conducted of all relevant prior art in the PTO. However, the search records may be incomplete, and as many as 20% of the patents in a particular category have been found to be missing. Thus, important references, which may anticipate the novel features of the invention, may not be found in a search of the PTO records. Such relevant references that are missing from the public records may be found when the official search is conducted. In our experience, however, this situation is uncommon, and there is usually a good likelihood of obtaining a patent if, after we have examined the prior art, we recommend filing a patent application. Patent applications are maintained as confidential documents within the PTO and therefore are not searched. Sometimes when the patent issues (i.e., Submarine Patents) it may anticipate the normal features of the invention. In this instance, the new application is defeated even though at the time of filing, no defeating references were discovered.

IX. TO GET STARTED

In order to get started, we need to have at least a general idea of the invention and the inventor’s concept of its novelty. We find a written description plus drawings and/or photographs to be most helpful. It is also helpful to us if the inventor notifies us of any similar-type inventions out on the market today. Referring us to magazine articles, advertisements, etc can do this. A search can generally be completed within one month.

X. PATENT APPLICATION

A patent application is a detailed disclosure of the invention showing precisely how its structure or process produces the desired advantages over the prior art. Our fees for preparing such a utility patent application generally range from $3,500 to $8,000, or more, depending upon the intricacy of the invention. Additionally, the PTO requires formal drawings to accompany the application, showing every relevant feature of the invention. Drawings usually cost about $100.00 per page. Once the application is prepared, the inventor reviews it to see that it conforms to his/her impression of the scope and detail of the invention. When satisfied, the inventor must execute a declaration establishing that he/she is the true inventor.

Design patent applications are different from utility patent application. A design patent protects the ornamental features of the invention, not the functional aspects. Thus, with a design patent, a competitor can still use the basic concept or functional features of your idea so long as the competitor does not use features that look substantially the same as the patented design. A utility patent clearly has broader protection as the particular ornamental features of the invention are not the issue, rather the functional aspects of the invention can be protected. The cost for a design patent primarily depends upon the cost needed to prepare quality drawings. Since the drawings of the design patent are basically the entire substance of the patent, it is important to have quality drawings that accurately describe or show the features of the invention.

XI. FILING IN THE PTO

Once the application is executed, it is filed. The PTO charges a $1080 filing fee to process the application. If the inventor qualifies under “Small Entity Status”, the government fees are reduced by one-half.

XII. SMALL ENTITY STATUS

To qualify for small entity status, you must be an independent inventor, a small business concern, or a non-profit organization. For filing in the United States, a small business concern is a company whose number of employees, including those of its affiliates, does not exceed 500 persons. The definition of a small business concern varies for other countries.

XIII. PROSECUTION IN THE PTO

After the application is filed, the PTO conducts its own search of the prior art and requires us to make legal arguments distinguishing the invention from the references found by the PTO. The first of these responses is usually due six months after the application is filed. A second response may be required at a later time. The cost for prosecuting the application through the PTO after the initial filing ranges from $500 to $4,000, or more, depending on the complexity of the application and the requirements or arguments of the examiner.

XIV. ISSUANCE OF PATENT

If the PTO decides that the application should be granted, another government fee (an Issue Fee) is charged. The issue fee is typically $1,440, reduced by one-half for “Small Entity Status”. Finally, to keep the patent in force after the patent has issued, maintenance fees must be paid after 3½ years, 7½ years and 11½ years. Thus, the total cost for maintenance fees is estimated to be $7,200, also reduced by one-half for “Small Entity Status”. No maintenance fee is required for a design patent, which last for 14 years from the date of issuance.

XV. OTHER POINTS TO CONSIDER

If someone makes, uses, offers to sell, or sells the patented invention, within the United States or imports into the United States, without the patent owner’s permission, the patent owner must bear the cost of suing the infringer of the patent in court. Infringement suits are expensive and time-consuming. Additionally, in such lawsuit the validity of the patent may be attacked and the court may declare the patent to be invalid for a variety of reasons. These risks are stated not for the purpose of discouraging anyone from applying for a patent, but to make the inventor aware that there is no guarantee that the financial investment made in applying for a patent will result in a worthy return. Despite the uncertainties, over 100,000 patent applications are filed every year.
Important Patent Tip
Rule:A person shall be entitled to a patent unless…the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States….
35 U.S.C. § 102(b).General interpretation:A patent application must be filed within one year of any public use, disclosure, sale, or offer for sale of the invention in order to obtain a patent in the United States.

Tip:

File an application before marketing or making any sales. If you have already presented at a trade show, or otherwise disclosed or sold the invention, be mindful of the one-year deadline.
Inventor's Notebook
Record KeepingProving the date of invention consists of proving the date of the inventor’s “conception” of the idea and the date on which the inventor actually made, tested or used the invention. Thus, there are two general dates, one being the date of “conception” and the other being actual “reduction to practice”. In some cases, proving that an inventor worked diligently in going from conception to reduction to practice may be important. It is very important to have witnesses who can testify to the date of conception and reduction to practice. The filing of a patent application is a constructive reduction to practice.Usually records are not needed for proof until enforcement of a subsequently issued patent is attempted, or until a contest of inventorship develops. Accurate and contemporaneous record keeping is essential.Invention Disclosure
No special form is necessary, but a written description, which explains the invention and which preferably includes drawings to illustrate the invention, is needed, together with corroboration by a party other than the inventor. After a description of the invention is made, the disclosure should conclude with the following statement:

“This invention disclosure was written by [your name] on [date],”

and then the inventor should sign it. Underneath the signature, the name and address of the inventor should be printed or typed. Beneath that should be a witnessing paragraph as follows:

“Read and understood in confidence this ____day of ______________, 20__”.

There should be several signature lines and printed names for one or more witnesses who understand the disclosure. These witnesses should be people who you trust to maintain your idea in confidence, who are capable of understanding your invention, and who clearly are not co-inventors with you. The purpose for having a witness to the disclosure is to be able to have the witness testify that they actually did read and understand the disclosed invention on the date indicated. If witnesses do not understand the invention disclosure, they will not be able to tell if something was added later, and if they are a co-inventor, they will not be allowed to corroborate the invention.

The disclosure need not be signed by the inventor and witnesses at the same time, but the date on which the witnesses sign the disclosure is really more important than the date on which the inventor signs it. Attached is a sample invention disclosure document.

Inventor’s Notebook
It may be important to keep a diary of the date on when the idea was conceived and the steps taken to reduce the invention to practice. Entries of the work done, the dates and parts that were ordered, notations of delays in obtaining parts, and notes on the assistance rendered by others should be set forth in the notebook. Additionally, all entries should be witnessed and dated in writing, by at least one person other than a co-inventor. The following are some recommendations regarding the use of a notebook.

The notebook should be permanently bound so that pages may not be removed (preferably one with removable carbon copies that can be regularly filed for safe keeping).

The pages should be numbered sequentially with no pages missing.
Data and information should be entered directly into the notebook; sign and date each page as it is filled.
Keep only factual and accurate records.
Use permanent ink that will photocopy well.
Fill each page. If there is a blank, line out, initial and date it.
Write clearly and legibly and avoid unusual abbreviation.
Identify errors and mistakes and explain them in writing.
Attach support records to the notebook including equipment or parts purchased to build or test the invention. If that cannot be stored in a notebook, make reference to them and carefully store the records.
Keep the notebook neat and clean.
As the invention progresses, have the entries witnessed by someone who understands the invention. Have the witness write, “Read and understood in confidence” then the date and their signature.
Keep all records for the entire time the patent is in force and for at least six years afterwards.
Don’ts

Don’t use loose-leaf paper, napkins or other pieces of paper to record the progress of the invention.
Only use the notebook for invention information; no phone numbers, sports scores, or doodling.
Don’t record things about the invention that are not true–you would only be misleading yourself.
Don’t use pencil.
Don’t scribble or write in a foreign language.
Don’t erase, write over or use liquid correction for any mistake.
Don’t use family members as witnesses (including your spouse).
Don’t assume that your witness understands the work; be sure that it is understood.
Final Points
Remember to contemporaneously date each entry. Often times an invention will be memorialized for the first time in a computer memory. Such records may be in text form or in a drawing (computer aided design) system. It is also likely that such records will be revised as the invention is refined so that no permanent record of the initial conception may exist. Therefore, computer invented records should be printed out on a regular basis, and should be treated just like other hard copy records (execute and witness an appropriate written disclosure). This insures an inventive record to be permanently recorded even if the computer record of the invention is later altered.

Finally, avoid editorializing. Negative editorial comments reflect adversely on the work that is being done and if a dispute develops over when a particular invention was made, adverse comments regarding its function may be admissions that could be devastating.

Trademarks
What is a Trademark and How Do I Obtain One?
Trademarks
Trademarks or service marks can account for a substantial portion of a business’ value. A trademark can be a word, name, symbol or device which indicates the source of goods and is capable of distinguishing those goods from goods of others. Trademarks are property. (Service marks are considered trademarks, which relate to services rather than goods). They can be used for competitive advantage in the marketplace, often influencing buyer behavior and helping to create market dominance. As purchasers become brand conscious, trademarks become valuable. Businesses zealously protect these assets, especially when the marks represent a business’ quality and goodwill.Examples of TrademarksUnlike patents or copyrights, when properly used and protected, trademarks have infinite duration. Some well known examples include the following:KODAK for film Single word (fanciful)
APPLE for computers Single word (arbitrary)
LAND O LAKES for butter Word string
IT’S THE REAL THING for Coke Slogan
PILLSBURY for cake mix Name
COKE for soft drink Name
IBM for computers Letters
4711 for cologne Numbers
Gerber baby face Drawing
Orange back pocket tab for LEVI jeans Device
NBC chimes for broadcasts Sounds
Golden arches for restaurant Sign
Circular thermostat for Honeywell thermostat Product Design
Pinch Bottle for Whiskey Package design
Pink for insulation Color
Selection of Trademark
Selection of a trademark is important in terms of an owner’s ability to obtain registration, distinguish goods or services, and prevent others from using the mark. The more arbitrary or fanciful (i.e., EXXON, KODAK, SHELL gasoline, CAMEL cigarettes) the better. Avoid “genericide,” or generic use of a mark (i.e. ZIPPER, ASPIRIN, ESCALATOR, NYLON) or risk losing trademark status. Genericide occurs from using the mark to identify an entire class of products instead of a particular product brand. One should not name their new chair invention “CHAIR.”

Infringement of Trademark

The test for trademark infringement is whether the accused infringing mark is “likely to cause confusion, or to cause mistake, or to deceive.” The “likelihood of confusion” is as to source, affiliation, connection or sponsorship.

Actual confusion or deception of purchasers is not necessary for trademark infringement, but proof of actual confusion can be conclusive in proving a likelihood of confusion. A lack of intent is not a defense to trademark infringement.

Remedies for Trademark Infringement

Remedies for trademark infringement include Preliminary Injunctions, Permanent Injunctions, Damages (both actual and punitive), Accounting of Profits, Freezing of Assets, and Impoundment or Destruction of Articles.

Trademark Searches

Avoid infringing someone else’s trademark by conducting a trademark search. Adopting a mark already in use may be trademark infringement and may result in a significant damage award, including destruction of all trademark materials and an injunction to halt further use. A search can save on expenses of preparing signs, advertisements, packaging, letterhead, yellow page advertisements, and eliminate awards for infringement damages.

A preliminary trademark search can be completed quickly (within hours). Frequently, proposed marks are determined to be unavailable because of existing federal or state registrations. More detailed searches may be performed to cover state and federal registrations, trade journals, telephone books, company name listings and other source directories. The cost of a full search is insignificant compared to the risks of adopting a mark that is confusingly similar to another mark.

Certain basic research can be conducted by yourself, including review of local phone and business directories, client surveys, and inquiry with the Secretary of State’s Office.

Trademark registration

Trademark registrations can be either state or federal.

Wisconsin

In Wisconsin, a registration is evidence of adoption of the mark and the facts necessary to register the mark. Rights to a mark are acquired through use and not merely by registration. A business using a mark for a number of years without registering it could have rights over a business just beginning to use it, regardless of the new firm’s registration with the Wisconsin Secretary of State’s Office. Rights may be acquired by using a mark to such an extent that the public comes to associate it with a particular party so far as a certain product or service is concerned. However, until a court determines exactly who has such rights, no party has exclusive rights to a mark regardless of whether the mark has been registered with the Secretary of State.

Wisconsin Statutes do not require the registration of marks with the Office of the Secretary of State. Consequently, many marks are in use without being registered, therefore the Secretary of States Office has only a partial listing of those in use by businesses operating in Wisconsin. Other sources should be investigated.

Federal

Trademark rights are acquired through use and not merely registration. “Use” requires that the mark be placed in any manner on the goods or their containers or the display associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale. Use of a service mark includes the use or display of the mark in the sale or advertising of the services.

Advantages of Federal Registration

Registration gives extra value and protection to the mark, including:

Nationwide constructive use;
Use of the “®” designation;
Evidence of the registrant’s exclusive right to use the mark;
Right to exclude goods with the Bureau of Customs;
Establishment of “incontestability” status after five years continuous use;
Ability to bring lawsuits in federal court;
Special remedies, including injunctions, damages, attorney fees and triple damages;
Criminal penalties for counterfeiters; and
Establish priority of Internet domain names.
Procedure for Federal Application
Federal registration requires filing an application in the Patent and Trademark Office (PTO). The PTO performs a search of existing trademark applications, registrations and various general business resources. A trademark examiner also conducts an examination of the application to determine whether any statutory grounds for refusal to register the proposed mark exist.

If there are no grounds for refusal to register at the end of examination, the mark is published in the Official Gazette to allow members of the public to oppose registration. If no one successfully opposes registration of the trademark, the PTO issues a certificate of registration and enters the mark on the U.S. Principal Trademark Register. Such registration last for a term of ten years. The ten-year term is renewable indefinitely, assuming continuing use of the mark and filing of appropriate documents and payment of fees. Some of the appropriate documents include submission of an affidavit or declaration of continued use of the mark which is filed between the fifth and sixth anniversaries of registration.

Fees for Federal Registration

As of October 1, 2000, the filing fee (per classification of goods/services) is $325. There are several classifications of goods and services (i.e., paper and paper articles – Class 16; clothing – Class 25; beer, ale and porter – Class 32; communication services – Class 38). If your mark is used in a variety of classes you may decide to file in multiple classes and pay multiple fees.

If you use the service of an attorney or law firm you can expect to pay their fees to properly prepare the application materials and to shepherd the application through the PTO. Consideration should also be given to maintaining existing registrations to avoid cancellation.

Intent To Use (ITU) applications require an additional $100 fee per class for filing an amendment to allege use or filing a statement of use. Renewal application fees per class are $400.

Intent To Use Applications
There are two types of federal trademark applications: Use-based, and intent-to-use (ITU) applications.

As of November 16, 1989, federal trademark applications may be filed up to three years (theoretically) prior to actual use of the mark in commerce. Thus, applicants may effectively “reserve” trademarks. The applicant must have a bona fide good faith intention to use the mark in commerce. Actual use of the trademark is required for final trademark registration.

Requirements For Filing Federal Application
In order to file a federal application you must either have actually used the mark on your goods or services in interstate commerce or have a bonafide intent to use the mark in interstate commerce if filing under an intent-to-use (ITU) based application. Generally interstate use requires the sale of a product across state lines. Something more than a token use simply performed to claim an interstate commerce use will not suffice. If you are providing a service, it is best that such service also be provided on more than one state. A mark shall be deemed to be used in interstate commerce on services when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one state or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.
Important Trademark Tip
General Rule: Trademark rights are acquired by use.For trademarks, use requires that the mark be “affixed” (i.e., the mark is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto, or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale);
For service marks, use requires that the mark be used or displayed in the sale or advertising of services.
Tip:Make proper use and selection of a mark. Be the first to use a mark. Avoid using marks that are confusingly similar with other marks, and avoid using descriptive, generic, geographical or deceptive terms. A great example of a mark is “THE CLUB”. This mark has been used to identify a particular brand of steering wheel locks. A “club” has nothing to do with steering wheels. Over time, and through promotion, “THE CLUB” has become a powerful product identifier.Tip:

Make use of the federal Intent-To-Use application procedures to protect proposed marks.

Copyrights
Important Copyright Tip
General Rule:The copyright in a work protected under the Copyright Act vests initially in the author or authors of the work.Tip:Make sure you understand who is the author of the work, and where appropriate, use Work-for-Hire or transfer agreements.

General Intellectual Property
Common Myths about Intellectual Property
Myth: You must apply for and obtain a trademark registration before you have a valid trademark.Truth: Trademarks are created through use. Registration provides additional benefits (which may be significant).Myth: A patent allows you to practice the patented invention.Truth: Not necessarily. A patent allows you to exclude others. Anyone can practice an invention unless they infringe the rights of another’s patent. Also, a third party may have a patent on a particular component of your product or invention, thus requiring you to obtain a license to produce the product.
Myth: You own the copyright of your business logo created by XYZ Advertising Company.

Truth: Not necessarily. XYZ is the author. Absent a written agreement to the contrary, XYZ owns the copyright, despite the fact that you commissioned the work.

Myth: Once I obtain a patent, I can exclude others from the marketplace.

Truth: Not necessarily. A patent is a piece of paper providing you with the right to exclude others. It may be very expensive to assert those rights which may include bringing a lawsuit.

Myth: If I obtain a patent on my invention, someone else may make a slight modification to escape a claim of infringement.

Truth: Perhaps. This depends upon the scope and interpretation of the claim language. If the modification does not fall within the claim language, then the competitor may practice that modified invention. Claims are similar to meets and bounds real estate descriptions.

Myth: Patents, copyrights, and trademarks all have set expiration dates.

Truth: False. Patents expire twenty years from the date of filing; copyrights expire seventy years after the author’s lifetime or if it’s an anonymous or work-for-hire, the earlier of ninety-five years from publication or one hundred twenty years from creation. Trademarks and Trade Secrets may last forever.

Myth: I may use the ® designation on my trademark.

Truth: No. The ® designation may only be used to indicate a federally registered trademark.

Myth: I may use the © designation on my published artwork.

Truth: Yes. Use of the copyright notice is the responsibility of the copyright owner and does not require advance permission from the copyright office.
Recommended use: “© 2000 XYZ Company, all rights reserved.”

Myth: A customer list is a trade secret.

Truth: No. The Wisconsin courts have held that something more than basic lists of customers is required to provide trade secret protection of customer lists. Special market information or information providing you with a competitive advantage is needed.

Myth: If I reserve XYZ as my corporate name with the Wisconsin Department of Financial Institutions, I can use the mark XYZ to identify my products or services in the marketplace.

Truth: Not necessarily. The Department of Financial Institutions does not conduct a search of corporate name registrations to determine if the name would infringe a trademark. Resolution of trademark disputes come before the courts.

Myth: I can obtain a state copyright and a state patent.

Truth: No. Copyrights and patents are controlled exclusively by the federal government. The states can and do control trademarks concurrently with the federal government.

Myth: I must use an attorney to help me obtain a patent.

Truth: No. You may apply for a patent all by yourself. There are even some helpful how-to books on the subject which can be found in the libraries. See NOLO Press.

Myth: If I have an invention, the best way to protect it is through the patent laws.

Truth: Not necessarily. To obtain a patent you must disclose the best mode of how to practice the invention. If the invention can be practiced in secret (i.e. secret recipe or manufacturing technique) then it may be best to protect the invention as a trade secret.

Myth: Your employer owns any patentable inventions that you create.

Truth: No. The general rule is that absent contractual arrangements to the contrary, an independent discovery belongs to the employee unless it is within the scope and purpose of the employment. A “shop right” is an exception to the rule in that it allows the employer to use, without payment to the employee, an employee’s invention that was made using the employer’s time, materials, facilities or equipment.
Non-Disclosure Agreements
Nondisclosure or Confidentiality Agreements have limitations that should be considered when attempting to protect your confidential information. Among others, the limitations may include the following:Obtaining the signature of a recipient/company to a Nondisclosure Agreement can be difficult. Most companies have their own submission policies and use their own forms. Many of such forms do not provide meaningful protection and generally restate what rights you might already possess through patent and copyright laws. Caution should be exercised when executing a form prepared by the recipient since such forms are generally self-serving. It may be the case that such company would be willing to negotiate or modify the terms of its Agreement, however, to do so usually requires additional time and expense, and there is no guarantee any meaningful protection would result.
There is no guarantee a recipient will not use or improperly disclose confidential information. Thus, dealing with a reputable and trustworthy company is paramount. Dealing with a financially sound company is also important. Otherwise, if there is a breach of confidentiality, there may be no recourse against the recipient since the recipient might not be collectable. Moreover, if a third party receives the confidential information through no fault of its own or without notice of its confidential nature, there might also be no recourse against such third party. While drastic measures exist for assuring compliance with confidentiality (such as requiring the recipient to post bond, carry insurance, or to stipulate to liquidated damages for breach), such techniques are cumbersome and rare. There is no guarantee that any liquidated damages provision provided in any nondisclosure agreement would be held valid, or that such provision would be sufficient for your purposes.
Care must be used in completing the Nondisclosure Agreement to provide enough detail to sufficiently identify the nature of the confidential information while not revealing too much substance at the risk of over disclosure before execution. Otherwise, the recipient may refuse to sign the Agreement, having had the benefit of an overly detailed disclosure within the Agreement itself. If not enough detail is provided, you might lack a paper trail when required to prove what was the subject of the confidentiality agreement. The date should be included next to the Recipient’s signature. Both parties must initial and date the margin adjacent to any printed or handwritten material. Make duplicate copies of the Nondisclosure Agreement for multiple execution.
Care should be given to having the appropriate recipient or recipients execute the Agreement. While the Agreement may generally require a company to hold its employees to the same standards of maintaining confidentiality, it is best to have each person who deals with the information agree to keep it protected. At a minimum is to have the principal or owner of a company also sign in his or her individual capacity as well as that of the company.
There may be instances where no Agreement is executed. Lack of a written Agreement can cause enforcement problems and loss of protection. At a minimum, it is important to obtain some evidence that there is an understanding of confidentiality concerning the information, and that such information is clearly understood. This is best done through a writing of some kind signed by the recipient, and in general, the greater the details included in the writing, the greater the opportunity to protect such information. Even if an agreement is executed, any information that is conveyed orally should be immediately reduced to writing and presented to the recipient, explaining that the information is confidential and protected under the confidentiality agreement/relationship. It is important to create a paper trail that would assist in proving the existence and nature of any confidential information. Any written information or documentation that is conveyed to the recipient should be labeled as “Confidential” and “Disclosed pursuant to the Nondisclosure Agreement dated __________.”
The Agreement you may have received may be drafted for use and application under Wisconsin law only. Basic legal principals followed in Wisconsin might generally be followed in other jurisdictions; however there can be no guarantee as to the scope or sufficiency of the enclosed Agreement, either in Wisconsin or as used in other states.
The Agreement generally includes escape language to protect the recipient’s interest in any confidential information it may already possess or which has become part of the public domain. Such escape language can be modified so the recipient is more likely to execute the Agreement, knowing that the recipient is not required to keep the information confidential under all circumstances.
The recipient may insist upon a Mutual confidentiality agreement. This might make sense if your protections are in place, and generally shows that both sides are making a good-faith effort to deal fairly.
The Nondisclosure Agreement is not an Independent Contractor Agreement. An Independent Contractor Agreement is generally preferred and recommended when the recipient will actively undertake work on a given project and provides documentation as to ownership of any further developments. Among other legal benefits, an Independent Contractor Agreement provides clear ownership of any further developments. Such an Agreement is particularly recommended in the case of hiring any persons or companies who prepare computer software or other artistic works.