Physicians have their problems with prescription-seekers, and lawyers have our problems with form-seekers — client’s who call up requesting the lawyer to send them a form so that they can fill it out themselves. The most common request for intellectual property lawyers is an NDA — a non-disclosure agreement.
However, while most NDAs are very simple, some professional judgment actually goes in to selecting the right starting point. Does the client even need to exchange confidential information? Maybe an agreement is not even need. Is the client looking to make a protected disclosure of its own information, or trying to induce a third party to make a disclosure of its information? The level or protection probably should be different. Is there even a possibility that relevant technology may result from the disclosure? If so, a mere non-disclosure agreement won’t cut it, a development agreement that apportions rights in the technology is needed.
Here is a basic flow chart of the process for identifying the proper starting point for an NDA. Even at this basic level, the simple request for a form has at least five different outcomes.
The important thing is to make sure that we don’t enable Form-seekers, and make sure that professional judgment is exercised in determining the best type of agreement for a given situation. Strong IP protection requires more than correctly filling in the blanks in a form. Indiscriminately grabbing whatever NDA form is handy is a prescription for disaster.
Denise Daniels has sued the Walt Disney Company in the Central District of California for breach of an implied-in-fact contract to compensate her for using her ideas in the movie Inside Out. Daniels alleges that she relied on the custom in the entertainment industry “to provide ideas and materials to produces and studios in exchange for compensation and credit if such ideas or materials are later used.” She further alleges that “Disney-Pixar accepted the disclosure of the ideas in The Moodsters with an expectation that it would have to compensate Daniels if Disney-Pixar used this idea in any television, motion picture, merchandise, or otherwise.”
This case is a reminder that receiving information from a third party is risky business. Even where there is no violation of any traditional intellectual property right such as a patent, copyright, trademark or trade secret, one can still find oneself in a lawsuit alleging an implied-in-fact contract to pay for the “idea.”
While an implied-in-fact contract — a contract where none really existed — is well recognized legal doctrine, this case appears to present a new doctrine — implied-in-fact consideration. While most cases enforcing rights in ideas require that the idea be both concrete and confidential, many of the aspects of Daniels’ idea appear to have been publicly available. Her company, Moodsters Company, obtained a copyright registration (PA0001394057) on a pilot The Moodsters: Amoodsment Park Mixup, claiming a date of first publication of June 1, 2007. There have been Moodsters websites, and Daniels and her company have of and on been trying to register various Moodsters trademarks for more than a decade.
If the Moodsters are as publicly available as it appears, what did Daniels bring to Disney-Pixar that wasn’t already available to anyone? Is it possible that Disney-Pixar is in a worse position for talking to Daniels, than someone who just referenced her public domain materials. The answer is clearly yes. Not because Daniels is certain to win, but rather because even if Disney-Pixar is in the right, they now have to defend themselves.
Daniels reminds us that even in the absence of a confidentiality agreement, there is a risk receiving information from a third party. Rather than expose oneself to the vagaries of an after-the-fact contract, you may be better served with an explicit contract spelling out your obligations (or lack of obligations) to the disclosing party.