Wite-out®. Post-its®. Sliced bread. Great ideas can strike in flash, but can these ideas alone be legally protected? What are the best practices for legally protecting confidential ideas for entrepreneurs, inventors, and other innovators who must balance intellectual property protection rights with disclosure requirements to potential co-founders, investors, strategic partners and ultimately, the public? By having a better understanding of intellectual property laws, the owner of the idea can more confidently disclose proprietary information while reducing legal risks.
Confidential Business Ideas: What’s Legally Protected.
The legal and business affairs involved in an idea’s protection, commercial development and exploitation, generally involve legal issues that can be elusive to even the most experienced producers, entrepreneurs and investors.
It is well established under the law that ideas, themes, and concepts are afforded less legal protection than the expression of these same ideas, themes, and concepts, usually in the form of copyrights, trademarks, patents, and trade secrets.
In cases where an idea by itself is original, a legal duty of confidentiality must still meet legal requirements, one of which is the establishment of a confidential relationship between the discloser and the disclosee. A confidential relationship can only be established when there is a valid and signed confidentiality agreement between the parties, also known as a non-disclosure agreement or NDA, or, when a confidential relationship between the discloser and the disclosee is implied, for example through some special relationship which creates a fiduciary duty and with it a legal obligation not to reproduce, reuse, or otherwise misappropriate the discloser’s confidential information.
The best intellectual property and competitive barrier strategies are focused on the protection of copyrights, trademarks, patents, trade secrets and strategic partnerships, and less concerned with protecting ideas.
The Next Great Idea: What’s It Really Worth
To understand the futility of protecting ideas, consider for example an idea to manufacture and distribute a “floating coffee mug”. Can this idea be protected? Assuming there is a confidential relationship in place and other legal requirements are met, yes. In this case, by nature of publishing the idea in this blog, the idea is now in the public domain and even if original is no longer protectable through a duty of confidentiality.
Once the idea is in the public domain, is it still possible to build a competitive and protectable product – in this case the best floating coffee mug – and keep competitors and copycats at bay? Yes. More tangible forms of intellectual property are likely to be produced through the creation of a business plan, research and development of the product, building a working prototype, assigning a brand name, slogan, logo and trademark, and the various writings, sketches, graphics, technologies, software code, contacts, suppliers and know-how that make the production and marketing of the floating coffee cup possible.
The results and proceeds of these creations can be privy to a variety of legal protections under intellectual property laws in the United States and internationally. While there will surely be competitors who will copy the “idea” and create their version of the floating coffee mug, these competitors may face substantial legal hurdles imposed by the original inventor if the competitors, for example, use trademarks that create a likelihood of confusion; reproduce images, text, software code, or business plans protected under copyright laws; or utilize the patented technologies of the original inventor without a license.
Competitive Barrier Strategy Focus On Copyrights, Trademarks, and Patents, Other Exclusivity
A great idea is a terrible thing to disclose without adequate protection, and confidentiality agreements are important in all stages of innovation, whether at a startup or new projects in established firms. However, during product development and marketing phases and beyond, the competitive barrier strategy focus is likely shift toward protection of more concrete forms of intellectual property, and firmly developing unfair advantage in the marketplace.
After some general research online, a startup with a great idea seeking to protect competitive advantage and intellectual property during early stages of development, namely the idea stage, the business plan stage, or even the initial R&D or marketing plan phase, should consult an intellectual property attorney, preferably a copyright and trademark attorney experienced in technology-based transactions and in the startup industry, and better understand the venture’s intellectual property rights, and the best legal protection strategy in the short and long term.
Author: David N. Sharifi, Esq. is a Los Angeles based intellectual property attorney and technology startup consultant with focuses in entertainment law, emerging technologies, trademark protection, and “the internet of things”. David was recognized as one of the Top 30 Most Influential Attorneys in Digital Media and E-Commerce Law by the Los Angeles Business Journal in 2014. Office: Ph: 310-751-0181; david@latml.com.
Disclaimer: The content above is a discussion of legal issues and general information; it does not constitute legal advice and should not be used as such without seeking professional legal counsel. Reading the content above does not create an attorney-client relationship. All trademarks are the property of L.A. Tech & Media Law Firm or their respective owners. Copyright 2013. All rights reserved.
