Tuesday, September 28, 2021

How Effective is an NDA or Provisional Patent Application in Protecting Your Invention

    When it comes to protecting inventions, it’s no secret that patents are the gold standard. A patent gives the owner the exclusive right to make, use and sell the subject matter of the patent for a defined term (in Canada, 20 years from the filing date of the patent application). Inventors, however, aren’t always immediately ready to prepare and file a full patent application. It may be that the invention is still under development, or perhaps that its marketability needs assessing before investing in the patent process. If that’s the case, it is imperative that the inventor protect their invention in the interim.


If an inventor ever hopes to secure a patent, their invention must be kept confidential until such time as they file a regular patent application. In some countries, an inventor’s own disclosure of their invention benefits from a grace period, meaning the patentability of the invention will not be negatively impacted by the disclosure so long as an application for the invention is filed within that grace period (for example, in Canada, the grace period is 12 months). However, in many countries, including Germany, the UK, and France, that’s not the case. In these countries, as soon as an inventor publicly discloses the invention, they forfeit their right to a patent for that invention. 


That isn’t to say that an inventor, to maintain the patentability of their invention, must either file a full patent application or tell no one about it. Inventors typically have two options for protecting the patentability of their invention in the interim: an NDA or a provisional patent application.


An NDA (non-disclosure agreement) is a contract between a party disclosing confidential information (in this case, the inventor) and a party receiving that information. The agreement will set out the terms on which the disclosure is made and identify the information that is intended to be kept confidential. If an NDA does its job, the disclosure of the invention to the receiving party is not a “public” disclosure so as to impact the patentability of the invention. However, if the receiving party breaches its obligations under the contract, and divulges the confidential information relating to the invention to one or more third parties, such that it becomes public, the consequences for patentability are irreversible. Although the inventor may certainly seek compensation for breach of contract, there is no putting the genie back in the bottle so to speak. This is the major disadvantage of the NDA – having one in place does not guarantee that those bound by it will comply.


A provisional patent application is a feature of U.S. patent law. It is often described as an “incomplete” patent application. A provisional patent application has substantially fewer formal requirements than a regular, non-provisional patent application. The catch, however, is that a provisional patent application never issues to a patent – for that, an inventor will have to file a subsequent non-provisional application. A provisional patent application safeguards an invention by securing a filing date. The filing date of an application is critical because patent systems operate on a first-to-file basis. Simply put, “first-to-file” means it’s not particularly important who was first to invent something, but rather who was first to file a patent application for that same thing. A filing date essentially secures one’s place in line for patent eligibility, and most people can appreciate that being at the front of the line is a very good thing. 


Another related reason your filing date is so important is that an invention’s patentability is assessed as of its filing date. Recall that one requirement for patentability is that the invention is novel – in other words, that the invention has not previously been publicly disclosed. The earlier your filing date, the fewer public disclosures you have to worry about undermining the novelty of your invention and consequently your right to a patent.  


A provisional patent application is assigned a filing date just like a non-provisional application, and, if the applicant files a non-provisional application for the same invention within one year, that application will benefit from the same filing date. Note, however, that any new matter in the non-provisional application which was not described in the provisional will not benefit from the earlier filing date. Thus, applicants should take care to fully described their invention at the time of filing the provisional. Having filed a provisional application, an inventor can disclose details of the invention (provisional patent applications are held confidentially by the U.S. Patent Office), further develop the invention, and even sell the invention without needing to worry that the disclosure will be held against them, or that someone else will file for the same invention first. Further, filing a provisional patent application entitles the applicant to mark their product “patent pending”, which may deter potential copycats.


In summary, both an NDA and a provisional patent application are good options for safeguarding an invention in the period prior to filing a full, non-provisional patent application. A choice between them is likely to be made based on an individual’s risk tolerance, in that an NDA provides less fool-proof protection than a provisional patent application, as well as their preparedness to file provisional and non-provisional patent applications within the next 12 months. 


This article was co-authored by Christopher Heer and Annette Latoszewska, Heer Law.


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