Move In First, Negotiate Later

I. The house

Nobody would think of letting somebody move into a house and drawing up the tenancy agreement afterwards. One would not have to ask long who holds the weaker hand in that situation. The occupant is already living there. The owner is negotiating against a fact.

Nor would anybody be fobbed off with a declaration of intent — the occupant promises to behave decently, and the rent will be discussed later. No one signs that.

To the inventor, precisely this is offered as the customary procedure.

II. The customary procedure

It goes like this.

The inventor has something the others do not have. The others together have everything he lacks — machines, workshop, sales, money, access to the market. For anything to come of it, the two must be brought together.

Before anything is brought together, the inventor is asked to show what he has. For nobody can negotiate about something he does not know. That is the objection, and it sounds reasonable.

In return he receives a non-disclosure agreement. Sometimes he also files a provisional application for protection.

And then negotiation begins.

But what is negotiated is now something the other side already knows. What was a secret before is now knowledge in other people’s heads. And knowledge in other people’s heads is not the same as knowledge in one’s own — it is not scarce, it cannot be recovered, and whether it is used cannot be seen from outside.

III. What is exchanged

Before disclosure the inventor owns a thing: a secret. That is a strong possession. Nobody else has it, nobody has to do anything for it, and it is not lost as long as he keeps quiet.

After disclosure he owns a claim.

A claim is something else entirely. It must be asserted. It must be proved. It must be enforced — in proceedings that take years, demand documents and cost money an inventor as a rule does not have. And the infringement takes place inside somebody else’s works, to which he has no access.

The exchange is therefore not secret against protection. It is a thing against a claim.

And this conversion is the process at issue here. It happens not through ill will but through the order of events.

IV. Three places in the paper

Whoever reads such an agreement finds the usual three places where it holds less than it promises. None of them is hidden; all are in the text.

The exception for independent development. Not protected is what the recipient found himself without recourse to the disclosure. That is a sensible provision — and from outside practically impossible to refute. Whoever wanted to prove otherwise would have to look inside the other party’s development department.

The written form. Frequently protection applies only to what was handed over in writing, and to oral disclosure only if confirmed in writing within a few weeks. In practice the decisive things happen in conversation, at the machine, in the workshop. They are almost never confirmed.

The term. Three to five years is usual. In mechanical engineering more time passes between the first idea and the product on the market. The obligation lapses before the case arises for which it was intended.

None of this is fraud. These are customary clauses with comprehensible reasons. Only together they produce a paper that asks little of the recipient and takes the essential from the discloser.

V. The second turn

And if it does come to a contract, the same process repeats itself elsewhere.

For months there is negotiation, point by point, with drafts and counter-drafts. Then a finished paper arrives. It is already signed — by the other side. The inventor need only countersign.

An offer has thereby become a fact. Whoever now says he would like to compare the text against the negotiated versions reopens a negotiation everybody considers closed. He is difficult, mistrustful, petty — after months of good cooperation.

That is precisely where the effect lies. Not in a clause, but in the fact that reading the text is made into an impoliteness.

Whoever signs at this point without going through the text again is not naive. He behaves as one behaves among people with whom one has worked for half a year. That is the trust every cooperation presupposes — and it is exactly the place where it can be exploited most cheaply.

VI. Twice the same turn

Both processes are the same manoeuvre.

With the non-disclosure agreement, disclosure is pulled ahead of the contract. With the signing, assent is pulled ahead of examination.

In both cases the weaker party delivers before he decides. And in both cases the reversal is so arranged that it looks courteous: One must after all know what it is about. One will after all be able to trust one another after such a long time.

VII. The objection

It runs: nobody takes anything from the inventor. He gives it. He could have kept quiet.

That is true, and it is the point at which most conversations end.

But voluntariness on condition that nothing proceeds at all without disclosure is a meagre voluntariness. Whoever has the choice between disclosing and giving up is not choosing between two roads but between one road and none.

And the second part of the objection — that without an agreement he would have no obligation running in his favour at all — is likewise true. Only it does not answer the question that was asked. That question is not whether weak protection is better than none. It is why disclosure should take place before the contract in the first place.

VIII. The result is available

How the customary procedure turns out need not be calculated. There is a case.

Half of a process — the version reduced to two spindles — has become the state of the art. Several manufacturers have adopted it into their machines, a number of users produce with it. The rights had to be sold years ago out of necessity and expired long since. Neither the inventor nor anybody else can derive a claim from it today.

Payments to the inventor: none.

That is no reproach to those involved, for after the expiry of protection it is free to everyone. It is the description of an outcome. The customary procedure was followed, and this is what came of it in the end.

IX. What follows from it

The loss has a second side, and today it is the strongest asset.

For what runs in series production can be verified. Whoever wants to know whether the process holds need not ask the inventor. He goes to the machine manufacturers and enquires as a possible customer. He goes to the users and asks how it behaves in operation. He gets his answer from people who have no interest in making the inventor look good — some of whom do not know him at all.

This removes the objection with which the inventor is usually pressed into advance performance: We must after all first see whether it works at all.

Whether it works is on the market.

Something else is open, and the distinction is decisive. Not whether the process is any good, but whether one masters it. The one is a question put to reality and answered there. The other is a question put to the inventor — and it is answered not by disclosure but by working together for payment.

Only the connection is bitter: had the inventor kept his rights, the process might never have spread so widely. That it runs everywhere today, and can therefore be verified everywhere, is owed to the fact that nobody had to pay for it any longer.

X. The other order

It can also be done differently, and without anybody having to invent something new.

First the contract, then the disclosure. In full, with all particulars, with figures. Who gets how much, who contributes what, what happens if one party withdraws, who owns the rights, who conducts the proceedings and who pays for them. Signed by all parties, simultaneously, before a notary.

The objection is obvious: how is one to negotiate about something one does not know?

One does not negotiate about the invention. One negotiates about performance and share. What a process can do — which profiles, which accuracies, which times, which costs — can be described completely without saying how it is done. That is precisely what buyers have always judged: by what comes out, not by what is inside.

XI. The bridge

And there is a second route that makes the matter simpler still — wherever a particular condition exists.

There can be knowledge that is legally free and practically unobtainable at the same time. The rights have expired, anyone may use it, nobody can derive a claim from it. And yet hardly anybody masters it, because it is written down nowhere in usable form. It resides in a few heads and in a few machines.

Such knowledge is the ideal currency for a beginning. Whoever passes it on risks nothing, for it is free anyway. Whoever receives it gains years, for otherwise he would have had to work it out himself.

And it achieves something that cannot be reached by any other route.

Whoever does not master the simple form cannot judge the value of the extended one. One can tell him what would be attainable with the complete version of the process — a multitude of forms, such as the widely used polygonal tool interface Capto, standardised as PSC in ISO 26623 and to this day produced by laborious milling and grinding. It remains an assertion as long as he has not himself experienced what arises from coupled rotations. Only someone who has produced the simple profiles — H-profiles to DIN 3689, for instance — understands where the leap lies and why no other process makes it.

The first stage is therefore not an advance performance by the inventor. It is the education of the buyer. It creates the condition in which the other party is able to judge at all — and it does so on freely available knowledge, where there is nothing to lose.

This reverses the customary process. Normally the inventor must disclose so that the other recognises the value. Here the other recognises the value without anything being disclosed — because he has learned to master the preliminary stage himself.

The cooperation can thus be laid out in two stages.

In the first, the parties work out the state of the art together. The inventor contributes what he knows about it; his time is remunerated under a consultancy agreement. Here an ordinary non-disclosure agreement suffices — not because it has suddenly become stronger, but because at this stage there is nothing to protect.

The non-disclosure agreement is right precisely where it has nothing to protect.

During this time the essential thing happens. One works together and sees whom one is dealing with. The inventor learns whether the others pay what they promised. The others learn whether he delivers what he promised. And alongside, the actual contract is negotiated — not under time pressure, but while work is already going on.

In the second stage this contract is signed before a notary. Only then comes what is new and protectable, and new rights are applied for on it. What the partner receives is thus not a piece of information but a secured and exclusive position in something whose value he can by now assess himself.

Whoever will not engage with the first stage — a paid consultancy agreement on freely available knowledge — says something thereby about his interest. Not about the invention.

XII. Why the notary

Not because notaries are wiser.

But because their procedure enforces the order one is too polite to demand. The text is read aloud. Everybody is present. Signature is simultaneous. Nobody presents a pre-signed paper, and nobody has to ask permission to read it beforehand.

For land this is self-evident, for company shares likewise, for inheritances too — wherever something passes that cannot be recovered, or only with great effort.

With knowledge the irreversibility is more complete than with a house. A house can be brought back into one’s exclusive possession by an action for eviction.

XIII. What it presupposes

This order can only be demanded by someone who can wait. And only someone who must do nothing can wait.

That is the uncomfortable condition, and it is not to be exalted here. It is not about steadfastness. It is that running costs, credits and deadlines put an inventor in exactly the position in which he accepts the customary order — because he cannot afford to lose half a year.

Whoever has learned to live modestly has thereby acquired the only advantage an individual can have against companies. He is not pressed for time.

This is not advice. For most it comes too late, and for many it is unaffordable. But it names where the matter lies: The inventor is not too weak to negotiate. He is in too much of a hurry — and the hurry arises inevitably from the costly business of inventing, in which it is almost always about realisation as well.