Don't be frightened of confidentiality agreements

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Dear Professor Bruce: I'm a small business owner and have a great opportunity to work on a project with a large technology leader. They want a confidentiality agreement; but, I hate contracts and am afraid that if I try to negotiate I'll lose the deal. What should I do?Answer: Playing in the big leagues is both exciting and scary. You're thrilled that they see the value in what your business has to offer. At the same time you're afraid that if you ask for too much they won't want to play with you anymore. Relax, it's a normal reaction; but, that doesn't mean you take no action.Smart business owners recognize they have a business to run and protect. They also know that they have information that gives them a competitive edge. It could be the recipe for a special sauce that keeps customers lined up around the block; a technology breakthrough that cuts costs in half, or the know-how and expertise that comes with years of experience. It's what lawyers call a trade secret. It's what business owners call an asset.Trade secrets are the most easily created form of intellectual property according to legal expert Hanna Hasl-Kelchner, author of The Business Guide to Legal Literacy: What Every Manager Should Know about the Law (Jossey-Bass, 2006). You don't need a lawyer, applications, or government filing fees. "What you do need is important information and the ability to keep it secret - something we all learned on the playground," she says, "when you swore someone not to tell, cupped your hands so no one else could hear, then whispered in their ear - the grown-up business version is called a confidentiality agreement." The agreement should represent a deal you can live with and should be written in plain English. If it doesn't, don't be afraid to ask for clarification or changes. "Contracts are rarely etched in stone," says Hasl-Kelchner, "and are sometimes drafted to test the waters." Ask questions and be willing to negotiate tactfully. It will demonstrate your business sophistication. You'll earn respect, not ire. Since your technology project might lead to patents you should also know that in the United States patents must be filed within one year of commercialization or the information becoming public. Without a confidentiality agreement in place, the one year could tick by unnoticed and so could your patent rights. A confidentiality agreement keeps the clock from starting. It's a worthwhile investment.For more information visit www.legalliteracy.com.Bruce Freeman is president of ProLine Communications, a marketing and public relations firm in Livingston, NJ and co-author of Birthing the Elephant (Ten Speed Press). E-mail questions to Bruce(at)SmallBusinessProf.com.