Industrial Designs
5. Confidentiality
A Canadian design infringement suit cannot be launched until after the Canadian industrial design registration issues. Accordingly, the creator of a design is very vulnerable to infringers during the pendency of his application, as there is a window of opportunity for infringers to practice the design prior to issuance of the original creator's design registrations in either the United States or Canada, with little or no risk of ultimately paying damages for what would be seen as actionable infringement after the respective registration. In any event, it is wise for details of the design to be kept as confidential as possible until all the registrations have issued in major market countries such as the United States and Canada. Ideally, details of a your design should only be made available to those who have a definite need to know in order to further the commercialization of the products. Moreover, wherever possible, a valid "confidentiality agreement" should be signed by the recipients of such details in all instances prior to their receiving the details.
A confidentiality agreement is a simple contract between the party imparting the confidential information (the "discloser") and the party receiving the confidential information (the "disclosee"), wherein, in consideration for the disclosure of the confidential information which is the subject of the agreement, the disclosee agrees to retain in confidence the information disclosed. The consideration flowing to the disclosee for his promise of confidentiality is the opportunity to receive information which is not otherwise available, typically for the purpose of assessing the merits of same, with a view towards entering into a further agreement (such as, for example, a licence agreement) relating to the commercial exploitation of the confidential information for the mutual benefit of both parties. Thus, the purpose of the confidentiality agreement is to give the discloser (typically the creator) a remedy for breach of contract against those to whom he is most vulnerable until such time as his design registration(s) issue(s) or another more detailed contract (e.g., a licence agreement) is substituted for the confidentiality agreement. Remember, however, that the confidentiality agreement binds only those who are party to the agreement.
A suitable form of confidentiality agreement should be available from your patent agent or patent lawyer for a modest charge. There is no "standard form" for such agreements, which can be as short as one page, or as long as 8-10 pages. Frequently one finds that, the longer the confidentiality agreement, the less willing recipients will be to sign it, particularly without first receiving independent legal advice. If an intended recipient is a larger company, its representatives will typically refuse to sign all but the company's standard confidentiality agreement. Most of such standard confidentiality agreements typically deny that any confidence exists in relation to the material being disclosed to the company, and have the discloser expressly acknowledge that his/her legal rights will be determined by the patent, trade-mark, industrial design, or copyright laws of the company's country of residence, and that he/she should first file for any legal protection that might be otherwise available to protect his/her rights in the information he/she is about to disclose. As such, standard company agreements of this nature are more accurately referred to as "non-confidentiality agreements", and should only be signed in instances where the disclosing party has already filed his initial design application (as previously discussed) and has filed applications for any other types of legal protection that might be available to protect his "invention", such as trade-marks and copyright applications and the discloser feels comfortable that the company he is dealing with is reputable, and will treat him fairly. There is always a leap of faith in making this latter assessment.
The bottom line in deciding whether or not to make a disclosure to a non-related company or third party is: (1) File at least the first design application and/or other application(s) for legal protection as advised by your patent agent or lawyer prior to making any disclosures of the invention to anyone; (2) Get a tightly drafted confidentiality agreement (preferably drafted by your own patent agent or lawyer) signed prior to each and every disclosure of the invention to other parties (including potential investors, partners, prototype makers, and licensees), particularly in the earlier stages of the commercialization, where the window of opportunistic infringement discussed above is the largest; (3) Deal only with reputable parties whom you trust and with whom you feel comfortable; (4) Limit the number of disclosures of details of the invention to only those who need to know; (5) Ensure that all follow-up applications for the invention are filed within the treaty period referenced above (i.e. within 6 months from the initial filing date) claiming priority from the first filed application; and, (6) Vigorously pursue the prosecution of your industrial design or other applications, so as to have them allowed, or ideally, issued contemporaneously with the commercialization of your product.
If you closely follow the steps outlined above, you will greatly reduce the risk of having your invention misappropriated by unscrupulous individuals or companies.