Grow Your Business, Not Your Inbox
Business Start-Ups magazine, February 1998
Question: I have an idea with start-up costs of $150,000 to $200,000, and $3 million annual sales potential. How can I protect myself if I take the idea to a business or an individual?
Answer: There are only three ways to protect intellectual property in the United States: patents, trademarks and copyrights. A patent applies to a specific product design; a trademark to a name, phrase or symbol; and a copyright to a written document. All three methods have limitations; there's no one perfect way to protect an idea.
Companies really don't pay for an idea, patent or trademark. What they pay for is the work you've done to get an idea to market-ready status. I recommend taking your idea to a company with this proposition:
1. Tell them you've discovered a market opportunity or a new product with strong potential. Disclose only a bare outline of your idea.
2. Tell them you're willing to develop the idea at your own risk and expense until it's ready to market. (If you don't want to go that far, you can guarantee to develop the idea to an intermediate stage, such as a prototype, a market research study or a completed business plan.)
3. Ask them to agree to evaluate your idea when you've completed Step 2. If they don't want your idea at that time, they don't have to pay anything. If they do want to use your idea, they agree to pay either a prearranged lump sum or a royalty fee, or to negotiate in good faith toward an agreement.
This doesn't guarantee the company won't steal your idea, but it does give you an upfront agreement, some letters documenting your discussions, and several meetings over a period of time to support your case that the company stole your idea after agreeing to reward you for your efforts. I recommend you follow these steps even if you have a finished product or idea already in place.
I'm not suggesting you shouldn't also pursue a patent, trademark, copyright or Statement of Confidentiality and Non-Use. Obtain them if you can; use as many tactics as possible to protect yourself. But you have to accept risk as part of the inventing process.
Don Debelak, author of Bringing Your Product to Market (John Wiley & Sons, $19.95, 800-225-5945), is a marketing consultant specializing in bringing new products to market.