More details to this question:
We are a food manufacturer organized as an S-Corp. We have a product that an out-of-state customer uses as an ingredient in one of their products. We would like to sell to our customer the right to use our product recipe in their product, instead of producing the product for them - less hassle for us and no shipping costs for them. However, we do want to restrict them to using it only as an ingredient - we do not want them producing it for sale by itself. How can we protect our recipe? A non-disclosure agreement? Do I correctly assume that an IP Assignment/Sale would only be used for trademarks, copyrights, etc. and not trade secrets?
1 ANSWER
Correct, because you don't own anything. No patent trademark or copyright. What you have is just information until you patent the embodiment of it. You could file a quick patent and then assign your rights in the patent application. You could strike an agreement to divulge your trade secret to them or to have them pay royalties to use it and cover the entire trade secret with an NDA or non-compete agreement. Preferably both.
Answered on Feb 09th, 2011 at 12:28 PM