When dealing with a company to manufacture your product, they could steal your idea. They could file a patent application on their own or commercialize your idea or invention.
This article will discuss two ways (i.e., contract and patent application) to prevent the manufacturer from stealing your idea.
Use a nondisclosure agreement, independent contractor agreement, and NNN agreement
A nondisclosure agreement prevents the manufacturer from stealing your idea. The nondisclosure agreement prevents the manufacturer from telling others about your idea. If they try to commercialize the invention, you can sue them for breach of contract.
An independent contractor’s agreement can be used instead of a nondisclosure agreement. The independent contractor’s agreement functions similarly to a nondisclosure agreement. They have to keep your idea secret (i.e., not commercialize your idea). Additionally, the independent contractor’s agreement requires the manufacturer to assign any inventions to you that they might create as they work on your project. If you’re paying them to work on your project, you should be able to own any inventions that they conceive.
If your manufacturer is in China, use an NNN Agreement. The NNN Agreement stands for nondisclosure, non-use, and non-circumvention. The NNN Agreement is similar to the nondisclosure agreement in the United States. However, because of its common usage, most manufacturers in China will not hesitate to sign the NNN Agreement. You will have an easier time getting the manufacturer in China to sign the NNN Agreement than a nondisclosure agreement.
The low cost is the benefit of using an agreement to protect your invention. Attorneys will charge just a few hundred dollars for these agreements. Below is a link to examples of these agreements.
The downside to using an agreement to protect your idea is that you must hire an attorney if the manufacturer breaches the agreement. You can spend tens of thousands of dollars without any guarantee that you will stop the manufacturer and get your money back. In the United States, you have to pay your attorney fees. Also, you will have difficulty suing them in the United States, and collecting any damages would be difficult.
Despite these downsides, you should still have an agreement with the manufacturer so that both parties know their respective rights and responsibilities. Also, it gives you an extra claim to sue the manufacturer. It’s just one more thing that you can use to protect your invention.
File a patent application
A patent application can be filed to protect you from the manufacturer. Your idea would be patent pending before you work with your manufacturer on building your product. If the manufacturer commercializes your idea, you can sue them for patent infringement if and when your patent is granted. Moreover, if the manufacturer tries to file their patent application on your idea, then your patent application has priority. You would be given the patent, not them.
The downside to utilizing a patent application to protect your idea from manufacturers is the cost. A full-up regular patent application will cost you between $8,000 to $15,000. Don’t file a patent application if your only goal is to disclose your idea to the manufacturer to get pricing. There are other less expensive ways of getting a quote from your manufacturer. One way is to reveal a similar product to the manufacturer for estimation purposes. If you want more than just a quote, you should consider filing a patent application.
Another downside to utilizing a patent application is that patent pendency doesn’t prevent the manufacturer from commercializing your idea. A patent application is just that, an application for a patent. You don’t have a patent yet. You have to use one of the abovementioned agreements to stop manufacturers from stealing your idea.