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Ensuring your contracts protect your intellectual property

Feb 4, 2022 | Intellectual Property

Whether you have trade secrets or own patents for an invention, contracts can be a critical tool in preserving the value of your intellectual property (IP). Unfortunately, parties often realize too late that their agreements are ineffective for one of the reasons we discuss below.

“That’s the problem with an unenforceable contract; you don’t know until you try to take the contract to a court that it can’t be enforced. by then it is often too late to correct the issue. So, before you sign on the dotted line, make sure the contract you are signing is enforceable,” writes Jean Murray, the author of the article linked below titled, “Conditions That Can Make Your Contract Unenforceable.”

Unenforceable terms

Contracts drawn up without qualified legal support can contain terms that are not enforceable. Some examples of these include elements that:

  • The courts do not recognize in your state
  • Are not accurate
  • Are overly broad or vague
  • Include unreasonable restrictions
  • Are unlawful

These issues are not always obvious, but they can cause significant problems that leave critical information vulnerable. Legal documents from licensing agreements to employment contracts can trigger legal disputes based on a single phrase or clarity issue. 

Improper agreements

IP owners need different types of agreements to protect their assets. Having the wrong agreement can leave gaps in protection and make it difficult to enforce.

The type of contract an owner needs depends on who the other party is, the IP and where the parties are located. As such, owners may want to consider:

  • A licensing agreement for parties permitted to use protected IP
  • A confidentiality clause in an agreement with vendors 
  • Non-disclosure agreements with employees
  • Ownership clauses
  • Non-compete agreements

Each of these legal tools can protect IP, but they each serve different purposes and protect different aspects. IP owners may need one or multiple contracts to secure their property and a business’s interests.

Further, it is crucial to remember that legal agreements must meet specific criteria to be enforceable. This could mean putting everything in writing, having witnesses present and having it signed by informed, capable parties.

Making sure your protections are effective

While business owners may know everything about their business and assets, they often benefit from guidance when drafting, understanding and enforcing the agreements that protect it all. 

Ensuring your contracts actually protect your IP can save you and your business time and money and avoid the legal and logistical headaches that could threaten your company.

“It’s always best to have an attorney involved in making a contract, to avoid more obvious mistakes, and to make sure the language of the contract is clear and complete,” Murray said.

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