Using Your Intellectual Property to Escape the 9-to-5
If you're reading this article, then I assume you're sick of the 9-to-5, you've read The 4-Hour Work Week, and you're planning your escape from the cubicle. You've gone to every startup seminar and information session, dreamed up a slick-sounding name, read The Secret (in case you need it) and stuck some of Richard Branson's inspirational quotes on the wall behind your computer.
But, you're still not sure about one thing: What is that crucial first step when starting up?
In my experience, the thing stopping you from launching your product is that you're most likely scared to tell someone about your idea, thinking that it's going to get stolen, corrupted or plagiarized by every Tom, Dick and Sally. Or, you're worried that you're re-inventing the wheel, which is not only mildly embarrassing, but costly.
I know the feeling; I've lived though it myself as an entrepreneur, and I've seen it play out in the excitement that I dealt with in a previous life as a patent lawyer working with startup clients. But, here's the deal -- your own paranoia could be keeping you in that cubicle. Fortunately, there's a way to get over this while also setting your new venture up for success.
The field of idea protection, loosely termed intellectual property (IP), isn't just for gadgets any longer -- it's now a mainstay of how business is done and the sooner you come to realize that, the sooner you can create your own enterprise that uses these IP rights optimally to protect, launch and profit from your ideas.
These IP rights are typically patents for technical inventions (called "utility patents" in the U.S.), trademarks for brands, copyright for artistic creations and design patents for new industrial designs.
So, how do you manage these conflicting agendas -- keeping your concept secret while disclosing it to a select few who also have the power to steal your idea from you? Even if you get past that stage, how do you then attract funders, position yourself as a market leader, while throwing shade and making your competitors look as fresh as last Thursday's burrito?
It's seldom that you can find a magic bullet that can hit all of these at once. But, the good news is that, if used and communicated in the right way, IP is a massively powerful business tool that can help you set up your business to not only hit those buttons but also help you create generational wealth.
Sara Blakely famously did this with her Spanx shape-forming undergarments. She'd crafted a rough prototype by cutting the toes off her usual stockings, and realized she had a winning idea. To protect her idea and make her product look more "technical," she filed a patent application for her concept, before securing the help of a manufacturer. This catalyzed her launch into Nordstrom and became the first steps toward building her multibillion-dollar enterprise.
So, what are the easiest ways for you to use your early stage IP to overcome your paranoia, position yourself in the market and set yourself up for success?
1. Using IP-based agreements
In the early days, before you even know how viable or defensible your idea is, you can tie in developers and collaborators with a confidentiality agreement to at least bounce the idea off them and see whether it is actually technically feasible. These agreements are never watertight and can't be enforced against someone that's come up with the same thing independently (that's what a patent is for), but at least they show that the intention was to keep the idea secret to preserve your patent rights.
If things go well, you can perhaps also get them to sign a development agreement that expressly states that not only the eventual product, but also the intellectual property residing in the idea, is to be made over ("assigned") to you or a company you might set up.
Related: How to Avoid Trademark Infringement
2. Getting the Patent Office to do the heavy lifting
One of the most effective ways of using the IP system to your advantage is to leverage the search reports that are generated by the Patent Office. Sure, you can do your own free patent search or you can pay a patent attorney to do this for you. But, if you'd like to get up and running you'll most likely need to attract the attention of investors and convince them to part with their money.
Investors want to know that their money is safe and that they're not investing in something that is merely a copy of something else that's already out there. And the best way of convincing them about this is to get an impartial third party such as the Patent Office to do a search that shows which aspects of your idea are new and inventive.
These reports can be a powerful part of your arsenal if interpreted, packaged and presented to investors in the right way. Because here's the thing: Even though you insist your idea is new, the most convincing document you can bring to the negotiating table is a search report from a completely impartial third party such as the Patent Office, delivering a line-by-line account of which aspects of your concept are new, who your closest competitors are and what they are up to.
One of my clients created a new fintech solution. She needed to draw in funding and discuss it with large institutional clients -- all much bigger than her startup and able to crush her or, even worse, steal her invention. When negotiating with the investors, she went through her recently issued patent search report in detail to show that there was nothing out there exactly like her product and that competitors were focused on other areas of the market. Crucially, the way she presented the report to the investors helped her secure a seven-figure investment.
2. Launching as market leader
While most people know that they can protect their unique brands, logos and slogans with trademarks, the patent system can also be leveraged to move you and your startup more upmarket. Companies that make mention of their patents in their marketing are seen not only as originators, but also as market leaders, relegating their competitors to followers or copycats.
Using patents in marketing was done beautifully by Audi, which used this technique for its A6 model campaign. The ads stated that it had filed more patents during the creation of the Audi A6 than NASA had filed in its space program, a clever little advertising techniques that made Audi look smarter, more trustworthy and more innovative than its earthbound competitors.
3. Multiplying your profits
Finally, IP rights are only useful if others know that you have protected your ideas. Nobody is under an obligation to do a search to see whether your idea has been protected before they launch their own version. So, you need to make sure that your patent numbers are displayed on the product, that the letters "TM" are shown next to your brand (or ® if it has been officially registered) or with a design patent registration number if you've developed a new industrial design. In this way, you can at least minimize the chances of someone inadvertently ripping you off, while also ensuring that they pay royalties to you if you have protected your idea first.
Porsche uses this to great effect. While it is a global leader in sports car manufacturing, it leverages its IP to not only boost profits from car sales, but also by working with others and licensing out its IP. This is why you can buy Porsche-branded watches, toasters and kettles, while Porsche effectively multiplies the revenues generated by its brand and intellectual outputs.
When starting up, you need every advantage you can get, so let your intellectual property do the talking for you.