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How to protect your intellectual property when dealing with clients

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You are entering into an agreement with a client for them to provide your business with a product or service. How can you protect your intellectual property and make sure the potential client does not steal your ideas and start their own business? Requiring potential clients to sign an NDA (Non-Disclosure Agreement), including intellectual property clauses in your contracts and protect your intellectual property beforehand is the best thing you can do to ensure this doesn’t happen.

What is an NDA?

A Non-Disclosure Agreement, also called a Confidentiality Agreement is an agreement that sets out that the kind of information that you wish to protect. This can include trade secrets, confidential information and intellectual property. You need to set out clearly what information will be covered and when disclosure of that information to third parties will be considered a breach of the NDA.

Generally the NDA will provide protections against the misuse of the information, provide information as to what will be considered a breach of the agreement and how this will be dealt with, for example through seeking compensation or damages. An NDA may also set out a timeframe for the length of the agreement and how the confidential information will be returned to you once the agreement has finished.

A situation where an NDA would be useful would be if your business has a revolutionary idea for a type of phone app. You need an app developer to help build your idea but you do not want them to have the ability to simply take your idea and use it for themselves. You would look at entering into an NDA prior to negotiating with them and commencing work to develop your idea.

Contractual Protections

Many contractual agreements have intellectual property clauses within them to prevent a client from being able to use your intellectual property in a way you don’t want them to. For example, you don’t want the app developer you hire to be able to then use your intellectual property in apps they create for other people. Similarly, the app developer does not want you to be able to use their coding and software to go off and create more of your own apps.

This is where clauses in your client agreement protect your rights to your intellectual property. In this situation, you can either licence the app developer to be able to use your idea or you can assign your intellectual property to them. But what is the difference?

  • Licencing – is when you allow the other party the ability to use your intellectual property to fulfil their part of the agreement but you still retain ownership and all of the rights associated with it. You can set out the kind of licence they have to use your work and when it expires.
  • Assigning – is when you transfer full ownership, rights and title of your intellectual property to the other party and you no longer retain any interest in that property.

In this situation you would licence your intellectual property to the developer so that they can create your app, and have a clause that states that the finished product will be assigned to you, so that you then have full ownership of your app can do what you like with it without any restrictions.

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Different Intellectual Property Protections

Finally, there are protections you can put in place before you enter into any agreements with clients or service providers to protect your intellectual property. These include making sure your IP is covered by the following:

  • Patenting any of your inventive devices, substances or methods;
  • Using copyright to protect your original works of expression;
  • Registering a trade mark for your unique branding and logos; and
  • Registering any of your original and distinctive product designs.

Conclusion

LegalVision’s specialist IP and Trade Mark lawyers can help you get the best protection for your business when dealing with clients and contractors. Contact us today on 1300 544 755 for an obligation-free consultation with our Client Care Team!

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Bianca Reynolds

Bianca Reynolds

Practice Leader

Bianca is a Practice Leader at LegalVision with expertise in private M&A and Corporate law. She has assisted clients in a large number of business sale and share sale transactions and assists clients with their general corporate needs, such as shareholders agreements, share buy-backs and employee share option plans.

Qualifications: Bachelor of Laws (Hons), Graduate Diploma of Legal Practice, Bachelor of Arts, University of Adelaide.

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About LegalVision

LegalVision is an innovative commercial law firm that provides businesses with affordable, unlimited and ongoing legal assistance through our membership. We operate in Australia, the United Kingdom and New Zealand.

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