How to Protect your “Ideas”
The market is obsessed with unicorns – companies that revolutionize industries with their innovations. Common examples are Facebook, Uber and Snapchat. Their success stories make it seem like the exercise of conceiving and bringing an idea to the market is simpler than it really is. There are those who, inspired by these unicorns (and perhaps in gestational birds), dream of generating a great idea to present it to an investor in the hopes that they will buy it or pay royalties for it. If it were that easy, a book would have already been written.
An idea in a vacuum does not have much inherent value. The protection you may have over your “ideas” – that is, concepts and thoughts that have not yet been realized – arises primarily from two sources – intellectual property rights and contractual obligations.
The law grants rights to ideas in two ways – trade secrets and patents. Business secrets protect confidential information that: is not public; produce benefit to a company for its non-disclosure and; protective measures have been taken. To have this protection, you have to have a business, the idea has to give you benefit for its confidentiality, and you cannot have shared it.
On the other hand, for useful ideas such as formulas or inventions, there are patents. These grant their owners a limited monopoly for their exploitation. They are governed by federal law, and for the government to grant you a patent, your idea has to be novel, useful and non-obvious. That is to say: new and not known; serve a non-ornamental function; and not be easily discernible. If a patent is granted, the right may last a maximum of twenty years. If you think you have an idea that can obtain a patent, do not share it, and proceed swiftly to determine its feasibility.
As it pertains to contractual obligations, they protect by means of agreements that safeguard against the disclosure of information. They are known as confidentiality agreements (NDAs), Non-Competing, and principles of good faith and fair dealing. If any party fails, they’ll be responsible for the damages caused by the breach of the contract. Now, you are liable for breach of the agreement – not because the information has any inherent value, but rather because the contract is the “law between the parties”, therefore you can only claim against those who were privy to it, generally, not any third parties.
Presenting an NDA to an investor prior to the disclosure of your idea is a double-edged sword. Whoever is going to put capital in your project has to at least trust you, and at least know what business you are getting into.
The moral: don’t be afraid to share your idea. Nobody is going to drop everything they are doing to try and replicate something they’ve just heard. There is nothing new under the sun; so, it is very likely that others have already tried what you are proposing. Learn from them and you will see that it is not the idea, but the execution. Don’t focus on being the first person to think about it, focus on being the best at doing it. That is the only way to become a unicorn.
*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*