Career Testing
Career Testing
Career Testing
ENTREPRENEURSHIP / SEP. 04, 2014
version 3, draft 3

How To Protect Your Business Idea

Every entrepreneur and inventor has to be careful. Your idea, whatever it is, faces a certain amount of vulnerability in the early stages. It could be “stolen” and developed by someone else before you’ve had a chance to get established. While unlikely, it is possible. And the more people/companies you share your earth-shatteringly awesome idea with, the greater that risk becomes.

Do you have to keep it under lock and key, with 24-hour security? How best to protect your business idea in the early days?  

Be Selective With Whom You Share

The best and most secure option is to share your idea with very, very few people. If no one knows it, no one can steal it. That said, you may eventually have no choice. You might need to bring in additional help, such as a computer programmer or manufacturer to develop a prototype. In that case, be meticulous about whom you trust. Look into freelancers and manufacturers before you divulge anything. Are they trustworthy? Any complaints against them? Do they already make a good living? Trust your instincts, too. If your gut says walk, walk.

A Non-Disclosure Agreement (NDA)

An NDA can come in awfully handy...if the other party will agree to sign it. It’s a legally-binding document between two or more parties that are sharing confidential or sensitive information. In it, you outline and explain the confidential details of your idea. You explicitly state your ownership of the ideas, and that the other party agrees to not use, divulge, or modify said ideas for personal gain.

You could get a lawyer to draft it up for you, write your own, or search for free and paid templates online.

A Work-for-Hire or Freelance Agreement

Similar to a NDA, a work-for-hire agreement is a contract between you and a freelance worker (or manufacturer). Again, it explicitly outlines your idea, but it goes a step further and states exactly what work the freelancer will be doing for you, and anything they create, modify, or develop related to that work is also your intellectual property. If they improve your product or idea, it all becomes yours. They are paid for their contribution as outlined in the agreement, but they retain ownership of nothing. Lawyer, draft your own, or find a template online.

Non-Compete Agreement (NCA)

A third document you could utilize is an NCA. This document, usually between an employer and employee, states that the employee agrees to not enter into a business venture (either their own or by working for someone else) that would put them into direct competition. It is for a set period of time, although some employers have recently started pushing for an indefinite time frame. Obviously, if they sign an agreement forbidding them from competing against you, the likelihood they will steal your idea is very slim (what could they do with it?). The key is to be specific as to what constitutes “competition”. As with the other two, you could ask your lawyer to draft it up, write your own, or find a template or website to do it online.

File a Provisional Patent Application (PPA)

Ever read “patent pending” on a product? It means that the company has filed a provisional patent application with the proper authority (like the United States Patent and Trademark Office). It differs from a full patent in several ways:

  • Much cheaper. A provisional patent application costs around $100, while a full patent application can cost thousands.
  • For a set period of time. Usually good for only one year, a PPA does offer legal protection during that time, and allows you to better prepare for your full patent application down the road.
  • Patent Pending identification. A PPA allows you to stamp “Patent Pending” (and thereby alerting any would-be thieves that your idea is protected) on your product.

Consider filing a PPA as soon as you can. The benefits are well worth it. A full patent application is costly and can take years to finalize.

Create a "Paper" Trail

This last idea is a bit informal, but could help should the unthinkable happen. Keep meticulous records - both paper and digital - on everything connected to your idea. Emails to freelancers and manufacturers. Non-binding agreements. Purchases of supplies directly related to product creation. Anything that indicates in some way your idea or product, and has a date stamp of some sort.

It’s far from perfect, but it could be used to demonstrate just how long you’ve been thinking about, developing, or researching your idea. Should someone steal your idea and you take legal action, it just might convince a judge of your earlier ownership. Imperfect? Yes. But better than nothing.

Keep your cards close to your chest whenever possible. You shouldn’t immediately mistrust everyone you encounter, but nor should you throw your valuable idea around willy-nilly. Use your judgment and instinct, take proper (and easy) legal precautions if possible, and consider filing your PPA as soon as possible. Do that, and you should be safely protected from industrial espionage and thievery. The lock and key isn’t necessary...just don’t go offering it on a silver platter.

Photo by webhamster

Creative Commons License

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