ENTREPRENEURS—Discuss Your Ideas With Others Properly

INTRODUCTION

How many times have we encountered a situation or a dilemma and somewhat casually thought how life would be better if we only had a better solution, product, or service? And then the thought is either immediately dropped, or a bit of “back of the cranium” analysis is undertaken to quickly determine that the idea seems not to be interesting enough to pursue. Perhaps the problem is interesting to someone else, however, and often, we discover at a later time that another inventor or entrepreneur has developed a solution and brought it to market. Then we wish we had done it ourselves!

Ideas often pop into our mind and spontaneous get displaced by still another thought or an exigency. Call it creative daydreaming. It is sort of the mental equivalency of quantum mechanics where particles come and go--much to the amazement of both the average person and the cosmologist.

So, what should we do with our ideas?

How do we protect those ideas in discussions with others?

SOME IDEAS CAN BECOME AN INVENTION THAT MAY BE PATENTABLE

An idea may range from something that is only broadly defined (e.g., “Let’s build a better car.”) and not subject to legal protection to something that is very precise like an invention. An idea can be legally protected if it, or a significant aspect of the idea, is turned into an invention and patented. Ideas that lend themselves to development of an invention naturally are easier to act upon by first filing a provisional patent application (PPA).

SOME IDEAS SHOULD BE KEPT AS TRADE SECRETS, TRADEMARKS, AND COPYRIGHTS

Some ideas such as software should be kept as a trade secret much in the same way that the precise formula for a soft drink is often kept as a trade secret. As consumers we realize the benefits of the product without having to know the underlying construction of the product—software is thus best preserved as a trade secret.

Elements of the software involving visual display can also be protected in the form of copyrights. Many ideas benefit from establishing a trade mark (or service mark) thus creating value over time as consumers associate the trade name with performance and benefits. As with a patent the relevant applications for a trade mark should be made before any discussions (public or otherwise) are considered. Trade secrets, of course, are never discussed.

SOME IDEAS CANNOT BE PROTECTED AND ARE FRAGILE

Ideas that don’t have the quality of patentability are much more fragile and require special handling so to speak. The idea may have some degree of legal protection if it is only disclosed to another party under a nondisclosure agreement (NDA), but even then if the receiving party is not careful and discloses the idea to still another third party the idea is essentially lost. As a consequence of these considerations, an idea must remain a private matter until such time that it can be turned into an asset.

WHO CAN I DISCUSS MY IDEA WITH?

Inventors should not discuss patentable ideas until a PPA is filed and there should be no public disclosure until all international patents are also filed lest the international patents become invalidated by premature disclosure. An individual inventor or entrepreneurial innovator must follow a simple rule: No discussion with anyone except your patent attorney.

If an inventor decides to talk with another person about his/her idea then that discussion needs to be covered under an agreement to not disclose any information AND the signer also must agree that the discussion may include the development of patentable inventions which the inventor will also own. Failure to do that may cause the receiver of the information (even under an NDA) to begin independent development of ideas closely associated but competitive with the inventor’s ideas.

An individual inventor or entrepreneurial innovator who wishes to discuss ideas and inventions with another party should consult with a patent attorney to secure a proper type of agreement that preserves all rights for the inventor. This may strike some people as unusually paranoid but if an entrepreneur contemplates future professional investments it is essential that ideas not be shared outside a core of people all bound by strong agreements with the future corporate entity who will own the inventions and patents.

Business ideas consisting of new ways of doing business or the unique offering of new products and services are very difficult to protect unless declared as trade secrets. In that case, they are not revealed to any person unless an NDA has been signed and only then with trusted parties. Entrepreneurs are advised to check with their corporate attorney before discussing trade secrets. Generally, trust no one.

Entrepreneurs who contemplate founding a company should incorporate with the help of a corporate attorney who will also develop appropriate agreements that bind co-founders to assigning their ideas and inventions (indeed all IP) to the corporation.

CONVERTING IDEAS INTO ASSETS AND MONETIZING

So, how does one convert an idea into an asset? Here is my suggested process.

STEP 1—PRESERVE THE IDEA

Each of us has their individual method of remembering something like an appointment, a shopping list, an idea. As ideas are extremely fragile during their infancy it is critical to immediately write them down or record them as a contemporaneous recording. Keeping a written and signed log of ideas and inventions is highly recommended. Eventually, the idea should be kept within an electronic file so that it can be updated in time as related ideas and thoughts come along.

STEP 2—BRAINSTORM THE IDEA

At some point in time, ideally quickly, it is wise to brainstorm the idea by asking some key questions such as:

1. Is there a significant benefit resulting from the idea?
2. Is there a significant market for a resultant product, service, or software?
3. What elements of the idea can be preserved legally and thus treated as an asset.

If you can’t convince yourself that you have something that is valuable, then it is probably best to discard the idea (for the moment perhaps) and move on to other ideas you may have. If the idea seems to have high potential then move on to the next step.

STEP 3—SECURE THE IDEA AS AN ASSET

If the idea has any element of patentability a PPA should be filed. Additional PPAs can be filed as associated ideas are developed. But remember, there is a one-year window on filing the regular patent also knows as a nonprovisional patent application (NPA). Similarly, the idea may involve a name or identity which should be preserved as a trade mark—file the appropriate trade mark paperwork with the USPTO. Assets such as these are intellectual property (IP) that can be valued at a future time.

STEP 4—EVALUATE HOW THE ASSET CAN BE MONETIZED

Depending on your level of interest in the idea and the perceived costs (dollars and time) decide upon a course of action; for instance:

1. Abandon the idea if it is not viewed as providing a return on your time and money.
2. Perfect the invention and sell or license resulting patents and patents-in-process.
3. Start a business.

STEP 5—EXECUTE

Whatever you decide to do be sure to PLAN your next steps carefully and EXECUTE.

SUMMARY

Ideas are very volatile—they often ignite and burnout over a short period of time. Some ideas, however, are worthy of more time and effort to evaluate their merit. Some ideas can be turned into assets at the earliest possible time in the form of patents. Some good ideas can turn into a great business.

A proper evolution of a technology company involves at the earliest stages the retention of both patent and corporate attorneys that will help the entrepreneur/inventor properly protect IP and ensure that the corporation is the owner of the IP.

Remember the saying from World War II “Loose Lips Sink Ships.”

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Rocky Richard Arnold provides strategic corporate and capital acquisition advice to early-stage companies founded by entrepreneurs wishing to successfully commercialize high-value-creation opportunities, ideas, and/or technologies. More information about Rocky can be found at www.rockyrichardarnold.com. His book, The Smart Entrepreneur: The book investors don’t want you to read, is available for purchase on Amazon at http://tinyurl.com/pv248qq. Financial software for use by startups can be purchased on Amazon at http://www.amazon.com/gp/product/B00K2KPSI2. He posts articles about entrepreneurship on his blog at http://thesmartentrepreneur.blogspot.com. Connect with Rocky on Twitter @Rocky_R_Arnold; Facebook at www.facebook.com/rocky.r.arnold; Google+ at www.google.com/+RockyArnold01.