Chad Schneider

Protecting Your Confidential Information

07.14.2009 by Chad Schneider

In the world of new product development, protecting confidential information is vitally important to the success of your business. Time to market, competitive advantage, and even cost competitiveness can hinge on your ability to keep your information private while you conduct research and develop a product. Here are a few ways we protect confidential information during our product development process.

Need to Know Basis / Trade Secrets

It may go without saying, but the easiest way to keep your information confidential is to not tell anyone. This is referred to as a trade secret and works particularly well for things that cannot be easily reverse-engineered, like embedded software code or a process formula. The onus is on you to keep your secrets, but they can last forever (like the formula for Coke). When you have to work with outside developers or vendors, you can give them only what they need to build your part. Without the context of other components or the overall product, it’s less likely someone will be able to tell what is actually valuable about your overall product or concept.

Patents

Registering your idea with the US Patent and Trademark Office can actually be fairly cheap and easy, for the first year. It can cost around $1,000 to file a preliminary patent that then allows you one year to file the formal application. However, this registration gives you the registered invention date that can help you prosecute anyone that steals your idea.

The Non-Disclosure Agreement

Depending on the complexity of your product and situation, you may need to provide others with information that is actually confidential. To protect yourself, you can execute a non-disclosure agreement (NDA) between yourself and the person or company you’re working with. The NDA is an agreement that, among other things, lays out the obligations for protecting and handling confidential information. It can be one-way (protecting just your information) or mutual (allowing both parties to share confidential information). If you’re working closely with someone, the mutual NDA may make it easier to communicate ideas back and forth. However, if you’re only supplying fabrication drawings or you don’t want a vendor to give you anything confidential (that you then have an obligation to protect), you may want to just stick with a one-way agreement.

A quick online search will yield a number of template NDAs that you can download for free and modify to fit your needs. Any NDA should include various obligations to keep confidential information private and protect against either party using that information in competition. There are a few topics that we think are important in these types of agreements:

  1. Put a time limit on how long confidential information has to be protected. You don’t want to be required to protect someone’s confidential information forever.
  2. Specify that all ‘confidential’ information is to be identified and marked in writing to identify it as such. Things can be identified orally as being confidential, but must be followed up in writing within a reasonable time period. This is particularly important when multiple engineers are hopping on and off the project, and since our memories aren’t what they used to be.
  3. Any trade secrets must be specifically identified as such before transmission. They are unique since they can last forever…remember that if you decide to accept receiving one from others.

Keep it secret, keep it safe

Ultimately, it’s your obligation to keep critical information safe and secure: limit who knows what you’re doing, protect what you have with patents and/or trademarks, and consider an NDA when appropriate. Work with developers and vendors you trust, but get the NDA anyway.

Photo credit: Oliver Gruener

Disclaimer: I am NOT a lawyer and strongly urge you to seek professional assistance if you think you need to protect or handle intellectual property (IP). For what it’s worth, I do not consider anything in this article as confidential or proprietary…feel free to disseminate in any form…although I’d appreciate a little credit if you do.

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