As a business grows, pitching becomes increasingly important. As the business seeks investors, new clients, or even new employees, a business owner must repeatedly reveal details about the company to others.
As a business owner, it’s your responsibility to do everything within your means to limit risk and to keep the business running smoothly. But how does one go about limiting the possibility of a lawsuit to ensure business continuity? In this article, we’ll take a look at several actions you can take today to protect your business or company for tomorrow.
Idea theft is an ongoing concern for many of these business owners, who see themselves as having an advantage by being at the forefront of the market. A competitor could snatch the idea and put it to use themselves, leaving the business with little recourse.
Still, while the vast majority of people aren’t out to steal your idea, it is a possibility. There are a few steps businesses can take to help prevent theft as they begin to share their ideas with others.
Watch What You Say and Do
First of all, when it comes to your business image, owners and their employees should avoid making any public announcements or conducting any business that might be considered questionable. This means avoiding things like libelous or potentially slanderous statements, but it also means not doing business with unscrupulous individuals. You may not think it’s a problem working for a group of individuals who are known for shoddy business practices – because you know your company’s ethics are above reproach – but if they take a hit, your company’s name may be linked to them in the fallout.
This point also includes limiting any possible conflicts of interest. Business owners and their employees must avoid situations where a conflict of interest may present itself. Situations such as these can damage your integrity as a business owner and could land you in legal hot water. For example, sitting on the town council and helping pass an ordinance that benefits your business would be a conflict of interest, even if you didn’t make a decision with any benefit for your company.
Apply for a Provisional Patent
The patent an idea can incur far more expense than a startup is able to pay. During the process of shopping your idea around, a provisional patent can protect your idea for the first year. After twelve months, the provisional patent expires, however, with no option of being extended.
Trademark Your Name
A trademark can provide an additional layer of protection, since a company’s name is often tied closely with its idea. Also, by establishing a trademark, you also have added protection in the event a legal issue should arise. The documentation required to register a trademark can serve as written proof that your business idea was in the works at a specified time.
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.
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.
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.
Protect Your Files
As most businesses these days work quite intensively on computers, it makes sense to emphasize the safety requirements for your computer system. Businesses should have updated antivirus and other types of security software loaded and activated on their systems. If a computer system were to go down because of a virus, the business may be at risk of not being able to perform certain contracted work. In addition, key files could be lost or stolen, which could then lead to legal action from clients and/or suppliers.
Rather than trying to avoid attention, flag ideas as your own even at an early stage. “Use the right symbols in your media and marketing material alerts,” recommends David Bloom, head of Safeguard iP, a specialist Intellectual Property (IP) insurance broker. Patent and design numbers can be added later, but always keep on top of renewals, advises Bloom. “To ensure the continued protection of designs, trademarks and patents, don’t forget to pay renewal fees. Registered rights will expire if businesses fail to pay on time,” he said.
There can be uncertain moments when introducing your idea to a potential partner or buyer. If you give too much away, the new party could make a mint and shut you out of the process, so it’s important to be able to prove what happened when.
Without such protection, winning an infringement claim may be difficult. If you do encounter a copycat, it may be worth hiring a lawyer to investigate the merits of your case. If the manufacturer replicated your product and packaging to the point of customer confusion or copied something that’s protected under trademark or copyright law, you might have a strong legal case.
Bear in mind that a suit can cost hundreds of thousands of dollars in legal fees and take away time from your business. And there’s no guarantee you’ll win. To collect any money in court, you generally have to prove you suffered damages from the alleged copycat’s actions — a feat if your sales are rising.
In the end, the best way to protect yourself is by being extra cautious about whom you share your idea with. It’s worth talking extensively with others in your industry and getting referrals before disclosing your concept to anyone.