Tuesday, November 8, 2011
How to Protect a Business Idea
Picture this: you come up with a brilliant idea for a business. You tell someone who you think you can trust that it is the best idea ever. After sharing this business idea, they take it. They make it their business idea, and you have no proof that you are the one that came up with it. They take it and go and end up having a successful business and you're left with nothing.
You wouldn't want that to happen, am I right? Well, I'm going to share with you some ways that you can keep your business ideas YOUR ideas by protecting them.
The easiest way to keep your idea protected is to, of course, keep it a secret. People sometimes want to share their ideas whether to brag, or brainstorm, or make themselves feel as if they are adding to discussions. Those are not good reasons to give out information that you want to keep confidential. You need to know when to disclose information.
Have an actual confidentiality agreement, first of all. Then you can disclose information in increasing amounts as the deal progresses. Make sure that the balance of power in the deal remains relatively even in terms of oral commitments, commitments through information disclosure, money, or contracts. The disclosure should start with general concepts and progress to details at the contract stage. Keep notes on what, when, and where information was shared and who else was present. Those records can come in handy if you ever end up in court.
Disclose only what's necessary to make the deal, but don't be fraudulent or misleading. Don't without material information that substantially affects the deal. You want to maintain control over your product or idea, as well as protect your options for changing the timeline or details if needed. Once the deal is close and the contract signed, both parties should be committed to the process and protecting information.
Consider who it is you're sharing your information with. You wouldn't want to be talking to a competitor who would benefit from stealing the idea or product or a partner whose own business would be complemented by the success. Keep the other party's interest in mind. Be aware of who at the company you are dealing with - dealing with the CEO is different than dealing with a sales person. Also consider the employee's personal interests in having that information. Confidentiality agreements can help protect both parties and are available as legal forms.
There are risks to be on either side of the deal - the person disclosing the information, and the person receiving the information. So be careful who you talk to and make sure that you keep your idea protected best you can to keep it your idea. Don't spread it around to everybody, and make sure you get everything in writing when you do decide to divulge information to someone.