How Does an Entrepreneur Protect His or Her Ideas for Launching a New Start-Up?

When an entrepreneur calls me with questions about launching a new start-up, he or she is inevitably concerned about a single issue: protecting his or her ideas.

Most are a little disappointed to learn that ideas alone are not something that you can protect with an IP filing.

So, if ideas alone are not protectable, how exactly does an entrepreneur protect an idea long enough to get it off the ground?

My first piece of advice to entrepreneurs who call me with this issue is that they need to procure a well-written nondisclosure agreement, and use it with any friends, family, or business contacts that they share their idea with. Of course, I always caution them that the best form of protection is not to share confidential information in the first place, and if they do have to share confidential information, to keep the sharing to an absolute minimum. But certainly, to the extent they need to discuss their ideas with anyone else, the discussion needs to be covered by a nondisclosure agreement.

My second piece of advice is to make certain that anyone they hire to develop anything at all for them related to their idea needs to assign all their rights in whatever is developed to him/her or his/her company. The mistake I see entrepreneurs make over and over again is that they think payment amounts to a transfer of ownership rights. This is far from the case. If you pay for development and there is no assignment of rights to you, then the contractor will own the rights in what was developed.

My third piece of advice: if your idea constitutes an invention, you need to hire a patent attorney right away and get a provisional patent filed on your invention. Please note: THIS STEP WILL BECOME INCREASINGLY CRITICAL IF PATENT REFORM IS PASSED, SINCE THE NEW PATENT BILL WOULD MAKE THE U.S. A FIRST TO FILE SYSTEM, and you will lose your rights to the invention if someone else files the patent first.

My fourth piece of advice: if you have created or developed or recorded in any way your ideas and you are not concerned about having them published at the Libary of Congress, then you will want to register a copyright to cover what you created/developed/or recorded, so that there is a record of ownership.

My fifth piece of advice: If you come up with a great name for your company or product, immediately do a thorough search of the name on the USPTO website and the web to see if anyone else is using that name, and if so, confirm whether or not they are using it to describe similar services or a similar product that could be confused with your business, product, or service. A common mistake that I run into with my practice is that entrepreneurs get their heart set on a particular name, and then find out months or years later that they are infringing on another company's trademark and realize that they have to change the name(s) they have chosen. Not only is this a huge waste of money, but it's also a huge waste of time, since you will have spent an extended period advertising a mark that you have to drop. It is much easier to simply confirm that you are not infringing from the start.

At some point, you will of course want to protect the mark you come up with, but I don't recommend doing it immediately since there's a minimal amount of risk that another entrepreneur in your same space will come up with the same mark at the same time you do. It is far more likely that you will select someone else's mark than that you will lose your mark if you wait to file it until you can afford to do so.

Finally, my sixth piece of advice: you should not let people use your ideas except pursuant to a well-written agreement, even if the third party is simply "testing" or "evaluating" your product. Entrepreneurs tend to be educated on the need for filing patents, copyrights, and trademarks, and are generally willing to spend money on those filings; however, they often forget that the agreements are perhaps the most important piece of the puzzle to IP protection and either try to draft their own agreements based on contracts they find or in many cases, they simply forget to enter into an agreement altogether. It is a really bad idea to permit third parties to use your IP without having a well-written agreement to govern the relationship, particularly if you want to retain the value of your IP, even if the other side simply wants to evaluate the product or services It will pay to take the time to do things the right way--even if you have to spend a little more money up-front to get the work done.

In summary, an entrepreneur can protect his or her ideas--but just not directly as a particular IP filing. Thus, to protect the idea an entrepreneur has to examine the individual elements of the idea to determine how to protect each element. By utilizing a combination of nondisclosure agreements, copyright and trademark registrations, patent filings, and agreements, the entrepreneur can protect his or her ideas long enough to get them to market and start making money.

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