Many companies, particularly in the manufacturing and investment industries, often receive unsolicited ideas. Perhaps your company has experienced this. The discloser assures you that he’s got a million-dollar idea, but he wants you to enter a confidentiality agreement before sharing what that idea is. Take caution before signing – there are legal risks to entering these agreements, especially if you have weak policies in place for maintaining confidential/secure communications and trade secrets. Your company can be held liable for any violations of the agreement by you or your employees, whether intentional or not. It is actually okay to accept ideas on the condition that they will not be held confidential.

In fact, many companies have a policy of not signing confidentiality agreements, and instead find it advantageous to warn inventors about your policy and explain why you work this way. Rather than signing the discloser’s confidentiality agreement, consider having the discloser sign a document explaining your policy, using language such as in the example below:

[Your company’s name] (“Company”) has found certain precautions necessary in accepting disclosures submitted to it. Its employees have many ideas of their own for the improvement of the Company’s products and the development of new products, some of which may be similar to your own. To prevent any misunderstanding as to what the rights and obligations of the inventor and the Company are, the Company’s policies as to considering inventions are set forth below.

1. The Company cannot agree to hold your disclosure in confidence because it must disclose the invention to various employees and sometimes even to those outside of its employ, to determine its value to the company, and because agreements to hold in confidence have been found to entail other obligations not intended but either the submitter or the Company. It is understood, therefore than no confidential relationship or agreement to compensate is entered into by reason of the fact that the Company is considering your disclosure.

2. A full written disclosure, preferably the patent application drawing and specifications, or if there are none, a sketch or drawing (which can be a rough one, provided it illustrates the invention so one skilled in the art can understand it), must be furnished to the Company, so that the Company can tell or not whether it will be interested in your invention.

3. The Company cannot ordinarily return any descriptions, drawings or other disclosures sent to it, since otherwise it has no record of what was disclosed to it, though it may sometimes do so if allowed to make a copy. Therefore, you should keep a duplicate of any disclosures sent to the Company.

4. The Company is not under any obligation to reveal to you information of its own in the general or specified field to which the disclosure relates.

5. The Company wishes you to be satisfied that your interests are fully safeguarded. If an application for a U.S. patent has not been filed, you should have the copy of your drawings that you retain signed, dated and witnessed.

6. Any disclosure to the Company is made on the understanding that the Company assumes no obligation to do more than consider the disclosure so far as in its judgment the disclosure merits and to indicate whether or not the Company is interested. It is understood that you rely only in your rights under the patent laws.

7. The Company receives no rights hereby, or as a result of considering this disclosure, under any patent rights you now have or may acquire to the subject matter of the disclosure.

8. The foregoing applies to any additional or supplemental disclosure relating to the same subject matter.

 On the conditions set forth above, I am submitting herewith a disclosure of [list type of product]:

With a document like this, you are laying out a clear description of your company’s disclosure policy, as well as providing suggestions to the discloser to protect his idea. This olive branch may be enough to assuage the discloser’s fears of being cheated out of his idea, and you’ll be able to put into place a more enforceable (for you and your employees) confidentiality policy.