Contract
What is it?
What does it protect?
How do you get it?
How long does it last?
What are the advantages?
What are the disadvantages?
What is it?
A contract is simply an agreement, written or oral, between two parties.
What does it protect?
It will protect whatever the parties specify in the contract. It is necessary to be specific about the subject matter of the contract when it is being drafted. One example of a contract being used to protect a product design is when a designer gets an agreement with a potential manufacturer that they will not make, use, disclose or copy the product without the designer's permission. (See sample contract below.) These contracts are typically called "confidentiality agreements" or "nondisclosure agreements", and are standard ways to protect the novelty of both the function and appearance of a product before it has been introduced into the marketplace and before another type of protection, such as a patent application, can be filed. It is essential that such an agreement be entered into before the product has been disclosed to the other party.
How do you get it?
You get it by asking the other party to agree to certain terms. Contracts can be verbal, although this is rare and not recommended since it is very difficult to prove exactly what was agreed upon. Normally, the terms of the parties' agreement is first discussed, then negotiated, reduced to writing and signed by the parties.
How long does it last?
It will last as long as is specified in the contract. In the case of a "confidentiality agreement", it will last typically 2 or 3 years at best until the subject matter of the contract becomes public.
What are the advantages?
A contract can accurately reflect the intent of the parties; i.e., it can say whatever the parties want it to say. It can also protect an idea for a design before the designer has applied for more formal protection, such as a patent. It is an inexpensive way to protect the design while its marketability is being evaluated and investigated. It preserves the "absolute novelty" of a new product, which is essential to obtaining foreign design protection.
Contracts are also used extensively to govern the relationships between a designer and her principal, for example, as concerns ownership of designs, responsibility for protection and enforcement, royalty payments, etc.
If a contract is breached, you have a right to bring an action against the one who broke the promise. This would be in addition to any other rights provided by patents, copyrights, etc., so it is valuable to have a well-drawn contract for that reason. Also, people's memories slip as time goes on; a written contract can help both parties remember what they agreed to in the event of a dispute.
What are the disadvantages?
A confidentiality agreement is only enforceable while the product is under wraps. After public introduction, no one will agree to keep something secret that everyone else knows about.
It is sometimes very difficult to define with precision exactly what the parties are agreeing to keep secret. This is especially true in a development agreement context where, for example, a raw idea is disclosed to a designer who is being hired to develop it into a commercially viable design. At the time of entering into such an agreement, the only thing known for sure may be the raw idea; thus, it is difficult to draw any bright lines around what will be based on the raw idea (which the owner of the idea wants to keep) and what will be either "off the shelf" or will come from the designer's bag of tricks (which the designer wants to keep), simply because the details haven't been conceived yet.
View PDF of a sample confidentiality agreement
