Got a Business Idea? Know How to Protect It
Entrepreneurship is fraught with both opportunities and pitfalls. As a business grows, seeking new investors, new clients, or even new employees become increasingly important. The new business requires revealing many important details about the company to others. Because of this, one of the most common questions I'm asked is, "How do I protect my business idea?"
Protecting a new business idea can be a serious concern. Your competitors can snatch your idea and put it to use themselves, leaving you with little chance of using the same concept. While a vast majority of people won't steal your idea, there are many who specialize in incorporating good ideas from other businesses into their own. Therefore, it is important to learn about the ways to protect your business ideas.
Now, how to legally protect a business idea from being stolen? Read the few tips below to know about the ways to protect ideas.
Don’t Reveal Too Much
If you are wondering, “how to protect my idea from being stolen”, then the first step is to make sure you don’t reveal too much. Reveal a piece of information only if you feel that it is absolutely necessary. After all, there are two rules to success: 1) Don't tell everything you know.
It is not necessary to share every detail when a bare minimum information is just enough. Of course, there are exceptions when you are pitching to investors and lenders who want to know everything about your products or services before making investments. However, when sharing your idea with friends and colleagues, it's best to keep it high-level, and not discuss the details.
How to protect an idea? Unfortunately, the law does not recognize protections for an idea. But, that doesn't mean that there are not other ways to protect your budding business. One such trick would be to make individuals sign a Non-Disclosure Agreement or NDA. If you are pitching to a potential investor, it's best to have them sign a non-disclosure agreement, unless they are an institutional investor like an angel investor or venture capitalist. It might also be necessary to put your potential clients or vendors under an NDA. However you should remember, a non-disclosure agreement is a contract. Therefore, it is only as good as the words on the page, so don't pull something off the internet and assume that it's enforceable.
A full patent can incur huge expenses if your business is still in its infancy. In such a situation, you can opt for a provisional patent. A provisional patent can protect your idea for one whole year while you build and refine a prototype. However, at the end of 12 months the provisional patent expires and there is no option to extend it, so you must either file for a full patent or drop the idea.
If you are still thinking, “how to protect a business idea”, then trademarking might be an option. If you trademark your company name, it can always give you an extra layer of protection, because your company’s name is often connected with the idea. While the protection that trademarking provides in these scenarios is pretty narrow, it might be enough to protect your idea for a while.
Know the recipients
Whether you are revealing your idea to an investor or a potential client, do a bit of research about that person or a company prior to your appointment. You can search on the internet to find adequate information about a company or a person before establishing business relations. Find out if they were involved in disputes in the past. Institutional investors usually balk at an NDA because their business is based upon maintaining secrecy, but others may not have the same scruples. If someone you're talking to has a history of breaching confidentiality, it won't be difficult to find.
Another way to save your business idea is to make the person sign a non-compete agreement. This particular agreement prevents an individual or a unit from starting a business that would compete or threaten your idea and business within an established radius. These agreements are incredibly difficult to enforce, but in the right circumstances, they may be the difference between your business idea's success and its theft by a future competitor.
These are just a few of the many ways you can protect your business idea. Each has its own advantages and disadvantages. If you still do not know which method would be best for your business, give us a call at 205.545.7278 or fill out the form on this page.