how to protect your business idea

8/7/2019 How to protect your business idea

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How to protect your business idea

A very enthusiastic entrepreneur approached recently asking for adviceabout his new innovative business idea. After a half-hour long briefing, I feltit was a brilliant and poentially very profiable idea and told him so.Then, looking like he just remembered something, he asked, ³If I ask you tohelp me develop this idea into a bankable business plan, how do I knowthat you won¶t go behind my back and try to start this business yourself?´

That was an excellent question. In my three years in business planningconsultancy, I have helped scores of entrepreneurs get funding from banks,SEDCO, private investors and business partners. In fact, most of the

people I have worked with who met the lenders¶ requirements wheresuccessful in getting funded. However, there is a sad story of oneentrepreneur who, after I had developed his business plan, has I rejectedby a financier, when in fact it was very bankable. A few months later, thisguy told me that he had just seen in the newspaper a business providing aservice which was exactly similar to his proposed business.

After some investigations, it turned out that a relative of the financier whom he had approached had stolen his idea. Unfortunately, nothingcould be done about it.

At some stage in your entrepreneurial journey, you will probably wish todiscuss your idea with a third party. This could be informally, such asseeking advice or encouragement from friends or family, or formally, byhiring a professional consultant, or forming a partnership or joint venturewith another company.

Remember, once you put an idea into the public domain it can no longer be considered confidential or a trade secret. You should therefore takesteps to protect your business idea and intellectual property.

Keep your business idea on a need to know basis

Avoid telling all and sundry the important details, or the strategy or business model of until you have taken steps to protect it. Control thenumber of copies of business plans that you distribute, and only give themto those who need to know.

Most banks and finance companies are bound by client confidentialityand ethical rules which prohibit them from disclosing your ideas to other people. However, that may not stop unscrupulous employees from stealing



cleints ideas and implementing them themselves or passing them on tofriends or relatives.

So, always clearly indicate on the cover of your business plan documentthat it is confidential. I would suggest the following wording:

THIS BUSINESS PLAN CONTAINS INFORMATION WHICH IS PROPRIETARY TO ABC. NO PART OF THIS

PLAN MAY BE DUPLICATED FOR COMMERCIAL PURPOSES OR DISCLOSED TO THIRD PARTIES WITHOUT

THE PRIOR CONSENT OF ABC.

Further, you might want to get the recepient of the business plan to sign aNon-Disclosure Agreement, containing wording similar to the above. Therecepient will sign acceptance of this term, making him liable if it is proventhat he stole or passed on your idea to someone.

Intellectual propertyYour intellectual property is what sets you apart from competitors. It could

be your company brand, invention, design or creative work. Protecting your intellectual property makes strong business sense.

If you form a partnership or joint venture, draw up a contract defining whoowns the idea and what the share of future profits will be.You must seek professional legal advice before taking any final decisions.

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The business benefits offered by intellectual property are obvious. It canset you apart from your competitors, giving you a USP. It can be a valuableasset you can sell or license to others. But you won¶t be able to reap everybenefit unless you manage your IP effectively. You need to begin byobtaining proper protection.

There are four areas of protectionCOPYRIGHT

Copyright protects creators and owners of the written word, art,photographs, music, sound recordings and films. It exists as soon as there

is a record of the material that has been created. Zimbabwe¶s Copy RightsAct (Chapter 26:01) governs copy rights.Clarify your rights by clearly marking anything you wish to be protected withnotification of your copyright and the year it was created. You must notcopy anything without a copyright holder¶s permission. Damages awardscan be severe. As part of your employment contract, make sure



that the copyright to material created in the course of employment isµassigned¶ to your business. Also make sure you own the rights to materialyou have paid a supplier or freelance to create.

DESIGN RIGHT AND REGISTRATION

The Industrial Designs Act (Chapter 26:02) protects your new and originaldesigns from being copies by anyone. The design right protects the originaldesigns of the shape or configuration of a product. It lasts ten years after the first marketing of articles made to the design.

Without being granted permission, you cannot copy anything that isprotected by design right.Make sure you own the design rights to your logo,website and any products you create.

PATENTSPatents protect inventions and prohibit others from making, using or sellingan invention without the inventor¶s permission. They are concerned with thefunctional and technical aspects of products and processes. Patents mustbe registered. Protection lasts for up to 20 years. Patents are governed bythe Patents Act (Chapter 26:03)

TRADE MARKS

Trade marks distinguish goods and services. They include devices such aslogos, names and slogans. They help customers to recognise a specific

company¶s product. For example, a vacuum cleaner is a product, butHoover is a trade mark.You must not use other companies¶ trade markswithout permission. Trade marks must be registered. You can register your business name as a trade mark. Trade marks are governed by the TradeMarks Act (Chapter 26:04).

Case Study from an Entreprenuer: How I protected my intellectualproperty

I founded my company in 2004, a few months after I had invented a newmethod of breast support ± in basic terms, an invisible, backless and straplessbra. My concept is revolutionary because it does not work like anything inventedbefore. For instance, it can support very large sizes.It happened because I had had problems finding a suitable bra to wear with astrapless evening dress I had bought. Rather than take the dress back ± and,



because I¶m a scientist ± I began cobbling something together in my bedroomfrom various bits of material. The results worked very well.I worked in a lingerie shop while studying, so I knew that other womenexperienced similar problems. I was sure I had come up with something that hada lot of commercial potential.

I began to spend more time and money developing the idea. I knew that I had tofile for patents and register the design so that my intellectual property would belegally protected.If you come up with a new idea, you have to do a lot of research to make sure ithasn¶t been described elsewhere. I didn¶t publicly disclose my idea before I hadfiled my application. Doing so can prevent you from getting a patent.It is a good idea to get people you work with on your designs to sign non-disclosure agreements.It can be wise to file a patent application during theresearch phase. It¶s a lengthy process ± it can take anywhere between twoand three years before you know whether you have a patent.

A patent covers more than one single design. The design must be new, inventive[in the sense that the design isn¶t obvious] and it must have an industrialapplication.I would really advise that you get a registered patent agent to helpyou. People sometimes say that patents can be µgot around¶. In many cases thisis because the patent specification has been poorly written.I submitted drawings of my design to help with its description. Including all keyinformation is crucial.

Patenting a design is a very lengthy and expensive process. I reckon it¶s costme over $10,000. This is because I have paid to work with a specialist patent

agent. These are expensive, but it¶s important to make sure you are fullyprotected.Soon I hope to have full patent protection. Then I can fully reveal how my designworks.

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