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How to Protect Your IP When Pitching

Fri Nov 11th, 2022 by  Intellectual Property

Startups and other small businesses often develop groundbreaking products with great commercial potential. However, their limited resources often prevent them from manufacturing and selling those products themselves. It becomes necessary, therefore, to license the invention to third parties who have the resources to do so or to use the invention as leverage for investment. But pitching an invention to a third party is not without risk; the other company could steal the invention or the inventor could inadvertently lose patent rights in it. An Alabama intellectual property lawyer can help you protect your IP in these scenarios. 

File Patent Applications First   

Publicly disclosing an invention before you have filed a patent application (or a provisional patent application) generally is unwise. This is because qualifying inventions for patent protection must be novel — i.e., not found in prior patents or printed publications or otherwise “known” to the public. Pitching an invention to a third party can be considered a public disclosure under certain circumstances, which can bar the inventor from obtaining a patent on it later. To avoid losing patent rights this way, file a patent application on the invention you plan to pitch before you pitch it. 

Require a Nondisclosure Agreement

Nondisclosure agreements (NDAs) are a common contractual tool to prevent third parties from disclosing certain information, including trade secrets, that you provide to them. NDAs generally limit the ability of a third party to use your invention for any purpose other than to evaluate whether it wants to invest in your company. They can also establish a cause of action against the third party if the third party were to misappropriate the invention or disclose it to another third party. Compared to patents, NDAs are significantly cheaper and faster to prepare but offer less protection.  

Establish a Confidential Relationship 

Confidential relationships can sometimes be established even in the absence of an NDA so long as certain conditions are met. An “implied” confidential relationship may be established where the context of the communication and the behavior of the parties indicate that they intended to create one. When determining the existence of an implied confidential relationship, courts look to several factors, including: 

  • Whether the recipient of the confidential information solicited it from the discloser or the discloser volunteered it
  • Whether the discloser requested that the information be kept secret
  • Whether the discloser indicated that the information was for the purpose of a business proposition
  • Whether confidentiality was necessary to encourage the disclosure

Keep in mind, however, that the existence of implied confidential relationships is highly fact-specific and in most cases must be established after a breach has occurred. 

Reveal as Little as Possible 

Perhaps the easiest way to protect your IP while pitching is not to make a full disclosure but rather to disclose only what you need to and nothing more. In some cases, it may be possible to “reveal around” the most sensitive elements of your invention while still giving third parties an accurate accounting of what your product does and what its commercial potential is. Partial disclosures can also be used to coax potential licensees or investors into an NDA. 

Protect Your Valuable IP Assets With Counsel from an Alabama Intellectual Property Lawyer

Monetizing your IP assets can be an uphill climb and presents risks of which the average corporate officer is unaware. To avoid the risk of theft or loss of IP rights when pitching, please contact an Alabama intellectual property lawyer at AdamsIP in either our Birmingham or Huntsville office by calling 251-289-9787 or by using our online contact form.