I have invented a device that improves the efficiency of home heating systems. I would like to discuss potential relationships with large furnace manufacturers, but I’m terrified they’ll steal my idea. How can I protect myself?
One way to grow your business is by reaching out to strategic partners who offer complementary products or services or who otherwise can work with you to the mutual advantage of both your businesses. Strategic partnerships can expand your market reach and help you achieve more sales. But giving another business intimate knowledge about your company’s inner workings may make you a bit uneasy. There’s some inherent risk involved in sharing confidential information and intellectual property (IP).
According to Marc Goldberg, a SCORE mentor with business startup and management expertise, “It is very easy to steal your ideas or even your unique approach to customer fulfillment. Very quickly you could generate a competitor by sharing information with the wrong people.”
For that reason, you need to take measures to protect your ideas, information, and innovations from theft.
Goldberg recommends you do these things before working with a strategic partner:
• Determine what information should be considered confidential.The list may be extensive, and for a small business it could include business plans, customer databases, pricing programs, strategic plans, financial records, employee files, R&D projects, marketing strategies and new business development initiatives.
“Small businesses in the start-up phase that have proprietary information in the form of an invention or innovative approach should take precautions even with business partners in the case where one might leave before the business actually launches,” explains Goldberg.
• Review the potential partner’s website and social media profiles.Carefully examine how they position themselves and what they are saying about their company, team, products, services, accomplishments and capabilities. You want to be sure you’ll be collaborating with a business that truly can act as a partner, not as a direct competitor.
• Protect your intellectual property as you explore the potential relationship.
Goldberg advises, “Don’t send originals of anything. Use GoToMeeting or a similar vehicle to share your materials.”
Take official legal measures to protect your materials before you share original documents.
• Ask for an NDA. A non-disclosure agreement (NDA) will help protect your intellectual property when you’re ready to share it. You should get an NDA signed early on when exploring a strategic partnership opportunity.
An NDA should accomplish these three things:
- Identify if the NDA is one-way or mutual (i.e., applicable to only one party or both parties).
- Specifically define what confidential intellectual property will be included under the NDA (and consider addressing what is NOT included).
- Define the term of the agreement. (Although you cannot protect your information indefinitely, you should specify a time when it can be renewed.)
In addition, Goldberg recommends, “Make sure everything you share has a copyright notice on it to protect yourself from IP theft.”
• Make sure you own any work they do for you.Create a work-for-hire contract that states you will own any work they do for you. That will help prevent them from claiming they own it.
By leveraging the advantages of a well-researched, carefully selected strategic partnership, you might exponentially increase your brand awareness and sales. Remember, however, you should always look out for the interests of your business by protecting your intellectual property. In addition to considering the tips here and asking for input from a SCORE mentor, also consult an attorney knowledgeable about IP legal issues including copyright, trademark, patents, etc.
This column is brought to you by the Merrimack Valley Chapter of SCORE, with nearly 55 current and former business executives available to provide free, confidential, one-on-one business mentoring and training workshops for area businesses. Call 603-666-7561 or visit merrimackvalley.score.org for information on mentoring, upcoming workshops and volunteer opportunities. SCORE is a national, non-profit organization and a resource partner of the U. S. Small Business Administration.
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