As part of its strategy, a company will have identified at what point a third party technology will be required or when it can license technology. Discussions to acquire or license technology should be commenced at an early stage so that both parties can evaluate the commercial viability of the proposed venture. However, to allow for open and productive discussions, intellectual property will most likely have to be shared either by one or both parties. In such circumstances, it is extremely important that the property is protected from unauthorised disclosure. Accordingly, both parties should consider signing a Non-Disclosure Agreement also known as a Confidentiality Agreement.

The Agreement obliges the receiving party to keep the property confidential and to protect it from unauthorised use. In certain circumstances, the parties may subsequently enter into an Evaluation and Option Agreement [See Other Types of Agreement ] under which the potential Licensee can evaluate the technology for a period of time and is given the option during that time to take a licence.

Confidentiality does not however stop when disclosing intellectual property to third parties. Companies should also consider the importance of protecting intellectual property entrusted to employees. It is therefore advisable in the case of employees, as well as agents and sub-contractors, to include confidentiality provisions in contracts of employment and consultancy contracts. In addition, the contracts should contain a provision providing that all intellectual property discovered or made during the course of employment or period of engagement will belong to and be the absolute property of the company.

Step 2 - Identify the Intellectual Property|Step 4 - Due Diligence Process