Does Filing For Patent End NDA?

Dear Rich: If company A and company B have both signed a legal nondisclosure agreement (NDA) and then company A applies for a patent on the business plan covered in the NDA, does that make the information public and therefore make the NDA null and void? Information in a patent application becomes public when the USPTO publishes an application 18 months after filing. If the applicant does not plan on filing in foreign countries, the applicant can opt out of the 18-month publication program. If the applicant has opted out, the application will only become public if the application issues (or the applicant changes position on foreign filing). (We've discussed that previously, here.)
What happens after publication. Whenever the information is published, that information can no longer be protected as a trade secret and will not be subject to an NDA. That doesn't necessarily make your NDA "null and void." If other nonpublished information has been included as part of the NDA, that should still be protected. For more on the subject, check out our NDA site.

Should We Wait for Patent to License?

Dear Rich: Our company has a product idea which has been professionally prototyped/tested and we have acquired a trademark. It is patent pending for the past 2.5 years and should be up for finalization within 6 months. It relates to a fashion technology and our intent is to try to license the technology to existing brands. I am concerned that potential customers (brand) could lose a sense of urgency if they have to wait for the patent to be finalized? As you know, there is always a chance a patent can be denied, delayed, or disputed. They could also look for workaround’s on the patent or possibly seek deals with like technologies already available. Due to the risks and costs involved, I have opted to license the technology instead of producing a line ourselves. Had we been in a manufacturing position, we would have produced our product under Patent Pending status. As we don’t have production facilities or know-how, serious cash flow, nor distribution channels we have opted for a licensing model. Should we wait for patent finalization before trying to license the technology out? We can't advise you what to do but we do know that many people in your position do not wait for a patent to issue before pursuing a license. Often that decision depends on the industry. For example, in the toy, entertainment and fashion industries, speed to market may be the most important variable, with proprietary rights being a second perhaps less important concern. You probably are aware that there is no legal protection for your technology until the patent issues. Because 18 months have passed, your patent may have been published by the USPTO (depending on whether you permitted publication) so you can take advantage of one protective aspect of patent law. Anyone who copies your invention now, before the patent issues, can be subject to infringement for past transgressions once the patent is granted, provided you place them on notice regarding your patent pending status. We talk about that more here.
Evaluation agreements. Most people in your position use evaluation or option agreements with potential licensees. These agreements allow someone to evaluate the potential, and if they like your stuff, to make a deal. If your application has not been published you will need a nondisclosure agrement (or some variation) as well.
License agreements. Because there is always a possibility that a patent will not issue many people in your position enter into licenses with a two-tiered royalty. (Here is some basic invention licensing information). If the patent issues, you receive one royalty; if the patent does not issue, you would be entitled to a lower royalty. There are numerous ways these agreements can play out and we've outlined a few of the scenarios in one of our books.