Who owns the intellectual property under an NDA?

Attorney Michael Lasky discusses NDAs: Non-disclosure agreements.

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Transcript:

This video is about a very tricky topic that is extremely important to most companies. If your company has ever signed an NDA, a nondisclosure agreement, this may apply to you. I’m gonna talk in particular about who owns intellectual property in an NDA agreement.

So first let me tell you about NDAs. Every client I’ve ever had has said, “Let’s use a standard NDA.” And I gotta tell you this. There’s a Standard Oil and there’s a Standard Bank and even a standard deviation, but there’s no standard NDA. They are all different and you need the right one for the right job. But I’m gonna focus only on intellectual property issues.

So let’s take an example. You have a concept and you need to go to a manufacturer to help them build it for you, or you need to go to a supplier, or you need even to go to customers to get some feedback on whether they like the product. This is a pretty common reason to use an NDA. Well, who owns the intellectual property that’s created under the NDA? Well, each party who created it will own it. So you have your stuff and they have their stuff, but what about the stuff you created together?

Well, unless your NDA has some provision for that, you own it together, and that’s not a good place to be because you are then joint owners and joint collaborators and neither one of you has exclusive rights. This is a disastrous place to be for many companies. If you are the party going out to a manufacturer and saying, “I need you to help us develop this product. I’m gonna show you exactly how to build it,” you can bet they’re gonna come back and say, “We’ve got some good ideas for you to make this cheaper, better, faster, whatever.” You need to own those ideas, and you do not unless your NDA includes it.

So when is the best time to fix this? Most companies will say, “Well, let’s just sign that NDA, and then when we get to the point of collaboration, we’ll work the deal out.” Too late. First of all, this collaboration may take place immediately. And, secondly, it’s hard to get control over property once it’s been created, and it’s a lot easier before it exists. So the time to fix it is at the NDA, not in some agreement later on. And the document to fix it is, in fact, the NDA and not that collaboration agreement which may or may not take place later. Otherwise, you have a problem that your NDA may create intellectual property that you don’t own.

I hope this is helpful. If you have questions, send me an e-mail. Thanks.