Everyone has ‘a million dollar’ idea. But is the ‘idea’ worth a million dollars or is the ‘execution’ of that idea worth a million dollars? An idea, even a new technology idea, is just that – an idea, and has no intrinsic value unless and until someone has invested to extract commercial value from it.
Consider Google founders Larry Page and Sergey Brin, who in the early days unsuccessfully tried to sell their search algorithm idea to existing Internet companies. What was it worth then? It did not yet generate income and was only a concept. They had to take on an angel investor and give up some of their company before the idea could be commercialised and have real value.
One Legal123 client recently asked me to prepare an agreement that gave him 49% and the owner of the idea 51% of the ‘business’. When I asked what was being contributed on both sides, he said he was doing all the work, paying for the development of the app, doing all the marketing and social media promotion. I asked what the other party was contributing, he said ‘the idea’.
I am sorry – but the idea is not worth 51%. Or anything really. It’s only an ‘idea’ until it is up and running.
What about protecting the idea?
I’m often asked by business owners: “I have this great idea, how do I make sure no one else copies it?” Let’s consider the options: copyright protection, IP registration and a confidentiality agreement.
Does Copyright protect my idea?
No. Copyright protects actual expression; patents protect inventions. Neither protect ideas. The idea is the first critical step but without some identifiable execution of the idea, there is no Intellectual Property (‘IP’) protection and you have no rights.
Can I register my idea?
Again, no. Unfortunately, you cannot register an ‘idea’. You have to have more than just an idea in order to register and protect it with IP Australia. It must either be created in some form – an intelligible plan or diagram, software written to support the idea or images developed around it – to make it a tangible, workable, identifiable product.
What about a Confidentiality Agreement?
Yes. You can protect the ‘idea’ by using a confidentiality agreement. With a confidentiality agreement, you are extracting a promise that, if it is broken, you can sue the other party for breach of contract. On the other hand, it can be difficult to get people and companies to sign confidentiality agreements. They argue that they are open to liability that they did not have prior to you revealing your idea.
So to protect your idea …
- Use a Confidentiality Agreement/Non-disclosure Agreement. It may help you most when you are looking for someone to help you develop your idea.
- Document everything. Put as much in writing as possible.
- Avoid revealing too much. At least until you are certain who you are dealing with and research the recipients well.