A David and Goliath Story: Don’t Lose Your Innovation to a Giant – the Importance of a NonDisclosure Agreement (NDA)

On October 30, 2019 the United States Court of Appeals for the Federal Circuit concluded that L’Oreal copied Liqwd’s patented method. You may think, “the innovation I am working on has nothing to do with cosmetics, why should I care?” Liqwd is a small innovative company who were able to win a fight with a large corporation because of their foresight and one simple document. If you are an innovator looking for investors, this case provides an important lesson: make sure you have a strong NDA in place before you speak with ANYONE.

Who are the players in this case?

According to Hoovers Research:

  • Liqwd, Inc. Founded in CA in 2008 has about 4 employees and annual sales of about $440,793.
  • L’Oreal, USA Founded in 1953 has about 18,860 employees and annual sales of about $12,310,880,133

What was the ruling in this case?

Liqwd’s patents are still valid and enforceable.

What was the evidence presented by Liqwd?

The Court found that evidence of copying was relevant to nonobviousness even though the copied feature came from an unpublished patent application rather than a product.

This ruling is based on the fact that Liqwd put an NDA in place and had a patent application before disclosing information to L’Oreal.  Liqwd was able to present The Court with evidence that L’Oreal copied parts of Liqwd’s method from an unpublished patent application that Liqwd disclosed to L’Oreal under a nondisclosure agreement.

The Federal Circuit Court explained that the relevance of copying evidence does not turn on whether a specific product was copied. To prove copying, the evidence must show that a party duplicated features of the patentee’s work based on access to the work.

As a startup Liqwd understood the importance of using the law to protect their valuable innovation. Liqwd filed patent applications in important markets worldwide and put strong NDAs in place.

What can you take away from this as an innovator?

To beat a giant isn’t hard, but it takes planning and a patent attorney!

  1. Speak with a lawyer early in the process.
  2. Make sure you have the correct documentation in place (patent applications, NDAs, Agreements).