Great salesmen connect with their customers and develop a rapport and trust that are important to maintaining long-term relationships. Customers like to feel important, and they want to feel like they are getting the newest and best opportunities. But, beware of premature disclosures regarding new products that haven’t yet been protected. Early disclosure can result in forfeiture of protection in many foreign countries and can have a significant impact on U.S. protection.
Many countries around the world are “absolute novelty” countries. Simply, this means that an invention cannot be made public prior to filing for protection. In an absolute novelty country, if a public disclosure is made before an invention is protected, the owner will forfeit protection for anything that was disclosed.
So what does it mean when we say a disclosure is “public?”
Under U.S. case law, “public” is generally interpreted to mean “not secret,” regardless of whether the public is likely to encounter the disclosure. This definition is broader than the ones found in many foreign countries, which require that the disclosure be sufficiently public for someone looking for the disclosure to be able to find it.
Given the broad definition of “public” that is generally accepted in the U.S., how does a company establish boundaries for its sales team, and how does it prevent the team from getting into trouble? With the right education, your team will know when to ask for your help. In most instances, a short discussion about the repercussions of a particular disclosure will bring the issues into direct relief.
So, let’s look at the types of disclosures that are typical to salesman/customer relationships.
The first thing your team should think about is whether the disclosure they will make is subject to an expectation of confidentiality. For example, your team would generally have an expectation of confidentially when talking with others within your own company. But, would they have the same level of confidentially when speaking with a janitor as when speaking with the CEO? Probably not. So common sense would dictate that the team exhibit more caution when talking with a janitor.
Likewise, when dealing with an existing customer and presenting new information to them, for example, over the phone, is the conversation considered confidential? Likely. What about telling the same customer the same information while golfing? If your expectation continues to be that the conversation is confidential, then it should be just fine to discuss new technology on the golf course. What if your foursome includes individuals who work neither for you nor for your customer? Unless there is a clear understanding of confidentiality, like a confidentiality agreement, it is likely that such a disclosure would now be public.
To the extent that disclosure to a customer or prospective customer is made under a confidentiality agreement, that disclosure will be protected. Such an agreement, by its nature intends your conversations to be non-public. Other means for evincing your understanding of confidentiality can include informal communications, articulated limitations on the use of the information or past dealings. Whether you have a confidentiality agreement in place or not, you should mark materials that are given to the customer as confidential. Absent a formal agreement, this can establish that at the time the disclosure was made, you expected it to be confidential.
If you don’t have a non-disclosure agreement, the perennial question becomes, “How much can I tell my customer without jeopardizing my intellectual property protection?” Very often, there is information that can be shared with the customer without compromising the intellectual property.
Determining how much information can be shared without crossing the line is a very fact dependent analysis, and this is when in-house counsel should be consulted. A review of any materials that are intended for presentation to a customer, e.g., slides, can establish a line between what may be disclosed and what should not be disclosed. A script is also a good way to keep on track and not over disclose.
Often, before a sale can take place, the customer wants to know how your material or equipment will work in his or her environment. You might find yourself collaborating with the customer in the form of a joint development or product trial. Such a situation will often be governed by a joint development or other agreement that will have provisions governing the sharing of information and the ownership of any new intellectual property that comes out of the joint venture. If such an agreement is not in place, then it is paramount that your intellectual property be protected before beginning such a collaboration.
These arrangements are fraught with opportunities for the parties to share an overabundance of information. As they work together to solve a problem or develop the best product, it is inevitable that the technical teams will share all the information that believe is necessary to bring the project to a successful result. In-house counsel will likely find out about the disclosures well after they have been made.
There are lots of ways that information can become public and the only way to guarantee that you will not comprise your position in protecting your intellectual property is to prevent the disclosures from happening before the intellectual property is protected.
In the next installment of this three-part series, we will discuss the implications of selling or offering a product for sale before it has been adequately protected. Since the America Invents Act (AIA) was enacted, not a lot of case law has developed in the area of sales and offers for sale. We’ll look at the policy reasons behind the development of “the secret sale” doctrine and how it weathers that changes made by the AIA.