How to Protect Your Business Idea Without a Patent
Learn how to invest your IRA or 401k into a franchise penalty-free. ($50k min)
It's natural to fear that your idea might be stolen. But you can't turn your vision into reality without the help of others. Sooner or later, you're going to want to ask an industry expert to evaluate your product or service. You're going to need to collaborate with a manufacturer or distributor. But patents cost thousands of dollars and take years to be issued. You can't afford to wait that long to start bringing your product to market.
Thankfully, there are creative ways to actively protect your idea without applying for a patent. Here are four affordable strategies that will protect your business idea from being stolen:
Do your research. Before you begin working with anyone new, be it an individual or organization, do some research online. Do they have a good track record? Can you find any complaints about their business practices? Try to get a sense of what they're all about. If you find cause for concern, consider asking about it. As we all know, not everything you find online is true. But if their business practices seem sketchy before you've even begun to work with them, that's not a good sign.
Use these three legal tools -- with the help and oversight of an attorney:
- Non-disclosure agreement (NDA): Have anyone you work with sign a non-disclosure agreement that commits them to confidentiality. An NDA can be a mutual agreement between two parties not to share information with third parties, or it can go one-way (since you're sharing information about your idea with them). If the agreement doesn't have an expiration date, that's powerful.
- Non-compete agreement: If you hire someone to help you, have him or her sign a non-compete agreement. A non-compete agreement prevents an individual or entity from starting a business that would compete or threaten yours within an established radius.
- Work-for-hire agreement: If you hire someone to help fine-tune your product, make sure to establish that you own any and all improvements made to the idea. Anything they come up with, you own. You will still need to list the person who came up with improvements as a co-inventor in your patent, but they will have no rights to your invention.
Turn to the U.S. Patent and Trademark Office for help. Fortunately, patents aren't the only tools available to protect our ideas. First, file a provisional patent application. You can do this yourself online or use a template such as Invent + Patent System or Patent Wizard to help you. The USPTO also has call centers available with staff members on hand to answer questions and offer guidance.
Filing a PPA costs a little over $100, while patents can easily cost thousands of dollars in legal fees, depending on the complexity of your idea. A provisional patent application protects your idea for up to one year and allows you to label your idea as "patent pending." You can then use the year to gain valuable insight into your idea.
Also, consider applying for a trademark, which you can also easily do online. This costs several hundred dollars and will help you establish ownership. Because names become synonymous with products, having a registered trademark cements the impression that the idea you're selling is closely associated with your product.
Build relationships with your competitors. This may sound counterintuitive, but establishing mutually beneficial relationships with your greatest competitors is one of the best ways to protect your idea. When I launched my own novelty guitar pick business, I hired the largest producer in the industry to manufacture our picks. They had little motivation to rip me off because they were already profiting from the success of my business. By giving them business, we were not seen as a threat (even though, in reality, we shared the same market space). We respected one another.
These tips will make it harder for others to steal your idea. With any legal document, be sure to consult an attorney to guarantee accuracy and protection of your idea.