How do you protect your intellectual property and confidential information when negotiating with vendors?

1 Identify your IP and CI

Before you enter any negotiation, you should identify what IP and CI you have and how important they are to your business. IP refers to any creations of the mind that have commercial value, such as patents, trademarks, copyrights, designs, or trade secrets. CI refers to any information that is not publicly known and gives you a competitive advantage, such as customer data, financial data, business plans, or marketing strategies. You should classify your IP and CI according to their sensitivity, value, and relevance to the negotiation, and decide what you are willing to share and what you want to keep confidential.

2 Use non-disclosure agreements

A non-disclosure agreement (NDA) is a legal contract that binds the parties to keep certain information confidential and not to use it for any other purpose than the agreed one. You should use an NDA whenever you share any IP or CI with a vendor, and make sure it covers the definition and scope of the confidential information, the purpose and duration of the disclosure, the obligations and restrictions of the recipient, the exceptions and exclusions to the confidentiality, as well as remedies and penalties for breach of the NDA. It is also important to review the vendor's NDA if they provide one, and negotiate any terms that are unfavorable or unclear to you.

3 Limit the disclosure

When negotiating with an NDA in place, it's important to limit the disclosure of your IP and CI to the minimum necessary for the deal. You should only share information that is relevant, essential, and beneficial, while avoiding anything that is proprietary, strategic, or sensitive. Additionally, limit the number of people who have access to the information and request the vendor to do the same. Techniques such as providing summaries instead of full documents or data sets, masking or redacting details or names, using encryption or password protection for digital files, and marking the information as confidential or proprietary can be used. Additionally, request for the return or destruction of the information after the negotiation has concluded.

4 Monitor the use

After you disclose your IP or CI to a vendor, you should monitor how they use it and whether they comply with the NDA. Record keeping is essential in this process, as it will provide a record of what, when, and how the information was shared. Additionally, you should be on the lookout for any signs of misuse, such as the vendor using the information for an unintended purpose, sharing it with unauthorized parties or competitors, claiming ownership or rights over the information, or copying, modifying, or reverse-engineering it. If any breach of the NDA or infringement of your IP or CI is detected, immediate action should be taken to stop the misuse, recover the information, and seek compensation or legal remedies.

5 Incorporate IP and CI clauses

When you reach an agreement with a vendor, it is essential to incorporate IP and CI clauses into the contract to safeguard your rights and interests. These clauses should outline the ownership and licensing of the IP and CI, as well as the scope and duration of its use and access. Additionally, the clauses should detail the vendor’s obligations and restrictions, warranties and indemnities, dispute resolution, and termination mechanisms regarding the IP and CI. It is also important to review the vendor's contract and negotiate any terms that are unfavorable or unclear to you.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?