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Wealth of Ideas, March 2005
All too often, inventors submit their invention ideas
to corporations in the hopes of selling their invention
for a nice pile of cash. By and large, however, the
outcome is that the inventor is either ignored or receives
a nice rejection (form) letter.
This scenario is played out frequently and raises a
number of questions. Is the company liable for stealing
the idea? How different must the product be from the
inventor’s description in order to constitute a
different product? And if the product wasn’t already
patented (or in the process of becoming patented), does
the inventor’s action of submitting the idea constitute
“public disclosure,” which starts the clock
running on the one-year grace period the inventor has
in which to file the patent application? (See our article
“Patent Basics: Statutory Bars,” December
2004 issue, for more on the USPTO’s one-year filing
requirement).
When approaching a corporation with a non-patented
invention, the inventor should be aware that a non-confidential
disclosure may result in a public disclosure –
after all, the recipient is under no obligation to keep
the information private. The inventor’s best defense
against this problem, obviously, is to approach the
corporation with a patent in hand or a filed patent
application (at least provisional). However, patents
are expensive, and inventors may wish to sell their
inventions without the time, cost, and bother of obtaining
a patent. Or the inventor may wish to file a patent
application at a later date after determining if there
is interest in the invention. In either case, the inventor
must take extra precautions when dealing with corporations.
If at all possible, the inventor should have the corporation
accept the disclosure of the invention in confidence
by having the corporation sign a non-disclosure agreement
(NDA). This, however, is not easily accomplished: corporations
generally won’t agree to this because the invention
may be identical to one they are already working on,
or they may wish to reserve the right to do something
similar in the future. Or they may simply wish to avoid
the possibility of future litigation.
And if the corporation does sign an NDA, the inventor
is not out of the woods yet. The corporation may accept
the submission with certain exceptions (which will almost
certainly be to the inventor’s detriment and the
company’s advantage). Or the corporation may make
minor changes to the idea and develop a similar product
but refuse compensation to the inventor on the grounds
that the product they eventually market differs materially
from the idea disclosed by the inventor (details, details!).
If even those ideas that are submitted in a confidential
disclosure can be circumvented and “stolen,”
what is the inventor’s recourse? Unfortunately,
there is not much the inventor can do. Many hundreds
more ideas are submitted to large corporations than
are actually accepted (with their inventors duly compensated).
In the world of licensing, there are no shortcuts.
Before approaching a large corporation with your submission,
secure a patent or, at least, file a patent application
to protect your rights. When negotiating an agreement
with a large corporation, read the fine print before
you sign – and as we always recommend, consult
competent legal counsel to be on the safe side.
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