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Should you show your Provisional Patent Application (PPA) to a potential licensee?

skpatentplAt inventRight we get asked this question all the time.  As I travel around the country and speak to inventors, it's a familiar dilemma.  You've submitted your product to a company and they have asked to see a your PPA.  Should you show it to them?

The simple answer is yes if they ask. But the real question (and advice I'd like to offer) is when.

As you already know, I believe that the provisional patent application is a wonderful tool for establishing what I call "perceived ownership".  It allows you to have 12 months of "patent pending" status during which you can try to license your idea.

(By the way, here's a link to the best method I know of to write and file a PPA that has value - developed by patent lawyer and law professor Gene Quinn along with the team at inventRight)

OK, so you reach out to a potential licensee with your product idea. Often they ask, "Do you have a patent?"  So in turn you respond by saying that you have filed a provisional patent application and that your idea is "patent pending".

In most situations, before you can even discuss the benefits of your product and whether it’s a good fit for this company,  they ask to see your PPA.

You need to slow down a little bit! Just because someone asks you for information (especially confidential information) doesn’t mean you need to send it immediately.  Some inventors get so excited that a company has expressed interest they will do just about anything!

It’s almost like a gut reaction.  You say you have a PPA and right away the company says they want to see it.  And you are excited - so you want to send it.  Well, hold on.

I’ve said before in other articles and blogs that most product inventions today have a very short life span. Yet lots of companies are still thinking "old-school" in that each product should have a patent. I don't agree, depending on the product and the category,

The truth is that it’s hard to protect anything  - I mean if Apple has over 200 patents on the iphone and it still can't stop Samsung, then how is one patent going to stop a copycat product in your category?  Most inventors and companies do not want to go to Federal Court!  It's expensive and time-consuming.  So do patents really matter? Here’s a link to an article I wrote for Forbes.

Don't get discouraged by all of this.  Our students license ideas all the time with a PPA and nothing else.  Keep reading!

For simple ideas and ideas that have short life span you only need perceived ownership. What do I mean by simple ideas?  New kitchen gadgets, products for pets, novelty gifts - these are examples of types of products that have a relatively short life span - they come and go in the marketplace.  The life cycle of these products might be shorter than the time it takes to get a utility patent issued!

So let's go back to your conversation with the company who might be interested in licensing your idea.  They have asked to see your PPA - that's good - they are interested!  Now is the time to have a conversation and get to know each other.  Make sure that they understand your product benefits.  Ask how your product would fit into their product line.  Ask about how long it will take them to review your PPA and determine if there is a good fit.  Ask them if there's any other information that they would want in addition to your PPA.  The point of all this is to gauge their interest - to see if it's sincere.

If the conversation goes well and they still show interest (and you are still interested!)  - now is the time to tell them you will share confidential information (your PPA) but that it you would like to sign an NDA (non-disclosure agreement) first.

Please remember NDA’s don't protect you from from every conceivable situation - they are simply a tool that allows two parties to agree not to disclose information to anyone else (a third party).   

Most companies will already have an NDA - and they will want you to sign theirs. It's very rare that they will sign yours.

So make sure that you read it very very carefully. Make sure it’s fair and balanced. If there are things about the document that you do not understand (and legal jargon is frequently complicated) then you should have a professional review it.  The burden is on you to make sure that you understand what you are signing.  And you should know that NDA's vary from state to state - they are not a federally regulated type of agreement - so just because you've seen one before doesn't mean this one will be the same.

Occasionally, there are confidentially agreements that have language about "reverse engineering" - basically saying they will not try to work around your invention. But most companies will not sign an NDA with this type of language.

So what’s the value of the NDA then?

Simply this, signing a document establishes a tone of professionalism and adds seriousness to the relationship between you and the potential licensee.

That’s about it.

Down the road, if either party felt that the terms of the NDA were violated, to enforce it would require going to court. And that doesn’t happen very often.

Still, I believe that an NDA does have value.

Here’s a link to a YouTube video where patent attorney Damon Kali , Andrew Krauss and myself discuss NDA’s. It's worth watching.

The point of all this is don’t just send anyone your provisional patent application unless you've taken the time to determine if there's truly some interest. Slow down, have a conversation, gauge their interest and then if they are interested  - try to get an NDA signed and then feel free to send them your well written provisional patent application.

Please realize I am not a patent attorney, and I’m not giving legal advice.  All of this is from my experience helping others to license products.

For a more in-depth discussion of what I've written about here, you might want to read my book that goes into a lot more detail.

How To Overcome Obstacles When Licensing Your Idea
Can I license my idea to more than one company?

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Monday, 18 June 2018

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