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How to Protect Your Idea in Business Discussions

Written by: Andrew Monroe Baer

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Posted about 2 years ago. 4 helpful votes, 0 comments

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Don't Disclose Until You Have to

The best protection for an idea is to avoid unnecessary disclosures. Intellectual property filings and non-disclosure agreements (both discussed below) are critical protections, but you will not be in a position to exercise legal remedies until AFTER your idea has been stolen. If you are having an initial conversation with a potential business partner, and you don't know yet whether they represent a serious opportunity, try to keep the chat on a high level and avoid divulging the "secret sauce" until you are comfortable with them and they need to know details for the conversation to go further.

Get a Non-Disclosure Agreement (NDA)

If you must disclose proprietary details, make sure the other party to the conversation signs an NDA or confidentiality agreement. Although there are NDA forms online, you should hire a business lawyer to draft or review the NDA, since the agreement needs to speak to your precise situation and the nature of the information being disclosed. For example, if you are not receiving confidential information from the third party, a two-way (mutual) agreement with reciprocal confidentiality obligations may saddle you with unnecessary risks and obligations. Or, you may benefit more from a narrowly drafted NDA, focusing specifically on information related to your idea and/or treating as confidential only materials marked as such, than from a broad NDA covering a wide range of business information. NDA's also help you preserve claims of trade secret status and prevent patentable inventions from falling into the public domain. Note: many venture capitalists will not sign NDA's.

Include Appropriate Stamps or Legends on Confidential Materials

Make sure you mark confidential materials that you provide to a third party as "Confidential" or "Covered by Non-Disclosure Agreement" (if there is an NDA in place) so that no one can claim later on that they were not on notice that the materials were confidential. Orally disclosed information considered confidential should be recapped and classified as such in a written letter. As mentioned in Step 1, restrict access to such materials on a "need to know" basis. Keep a log of what materials you provide and who gets them. Use discretion when marking materials as confidential; if you mark every single document as confidential, and some of the documents are obviously not (such as general marketing literature or publicly available information), a court will not take you seriously if you bring a claim later on for trade secret misappropriation or breach of the NDA.

Avoiding E-mailing Highly Confidential Documents

Avoid sending highly confidential documents, such as patent applications, by e-mail. Mail or Fedex hard copies instead. Soft copies of documents can be duplicated and circulated widely and almost instantaneously, significantly increasing the risk of unauthorized disclosure or usage.

Explore Intellectual Property Protection

If details of an potentially patentable invention must be disclosed, talk to an IP attorney about filing a provisional patent application before disclosing the invention, even under an NDA. Even if a company steals your idea outright, small inventors can run into the problem of proving this when the company responds that it came up with the idea first or independently of the inventor. Having a provisional patent application filed establishes a point in time by which you had definitely created the invention described in the application. If you then file a full (non-provisional) patent application for the same invention within 12 months, the filing date will refer back to the date of filing of the provisional application. Additional forms of IP protection, such as copyright, may also be available for software programs and other original works of authorship.