Getting Investors and Protecting Your Idea 5

Laws protect inventions with patents, creative works with copyright, and trade names with trademarks, however protecting an idea is a different matter. I don’t think you really can protect a business idea in any practical way. If it is a good idea it will be copied. That’s in the nature of business. Your only hope is to launch it yourself and execute the idea so well that your imitators are scared off.

Business ideas aren’t protected
In 30 years of business and consulting, I’ve never heard of any laws to protect business ideas. Laws protect inventions with patents, creative works with copyright, and trade names with trademarks.

The closest thing to it that I’ve ever heard is recent rulings on “business model” patents related to the Internet and Internet businesses. What I’ve heard is that some patents have been granted for specific flow of information and commerce on specific Internet sites. If you’re serious about that you’d have to talk to a patent attorney.

Real investors don’t sign NDAs
You also hear a lot about “non-disclosure” agreements (NDA), legal documents in which parties agree not to tell secrets that they disclose to each other. These are used a lot in business development and are a good idea in many business occasions. Non-disclosures are often impractical and hard to enforce, but they are used anyhow.

Real investors don’t sign NDAs. They don’t have to because ideas are cheap and plentiful. They don’t want to because an NDA could be used against them for nuisance lawsuits, even if they didn’t disclose. And they really can’t sign an NDA because they can’t afford to promise they won’t do a similar business with somebody else. The next person in the door, right after they turn you down, might have a similar idea and a more convincing business plan. Each time they signed an NDA they would be ruling out some kind of future business, and they can’t afford to do that.

Please remember, however, that I’m not an attorney. My view on NDAs is not an attorney’s opinion. Furthermore, do understand that I am not saying that you should forget about NDAs entirely, I’m just sharing my disappointment for how often they are rejected and how little protection they really afford. It’s a fine point, but important. Do work with an attorney on this.

Good ideas will be copied
So in the business world good ideas are copied all the time. Most successful businesses are copies. Look at sports utility vehicles, or fancy coffee shops, or websites selling books or CDs, or web-based free email. Every good idea gets copied. Expect it.

About the Author Tim Berry is the founder and chairman of Palo Alto Software and Follow him on Twitter @Timberry. Follow Tim on Google+ Read more »

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