11 Ways to Stop Companies from Ripping Off Your Invention
As an entrepreneur seeking to grow your business or make money from your invention, there is a very high chance that you will need to pitch your idea to someone if you want your business to grow.
For many such entrepreneurs, the possibility of your idea or invention being stolen is a huge concern, especially if your idea is something that creates a huge market advantage.
This places many entrepreneurs in a catch 22 situation: on the one hand, you need to bring another company – such as a manufacturer, investor, or distributor – aboard to help you bring your product to market, else you will not make any money off your idea.
On the other hand, there is the risk that the person you are pitching your idea to could snatch the idea and implement it without paying you any royalties.
This has happened to many young and naïve entrepreneurs.
They go out and pitch their innovative ideas to companies they hope to work with, only to have their ideas rejected.
A few weeks or months later, the same companies that rejected their ideas roll out products or services that are amazingly similar to the concept they rejected.
There are several cases where innovators had their idea stolen after pitching it to someone they wanted to help them bring their product to market.
Perhaps the most famous such incident is one that led to the founding of the world’s largest social media giant, Facebook.
Apparently, three of Zuckerberg’s schoolmates, Cameron and Tyler Winklevoss and Divya Narenda, approached Zuckerberg and asked him to develop a social media site for them.
Zuckerberg, however, refused to work for them, but he went ahead to create a website similar to what they had described to him, which he named Facebook.
This even led to a lawsuit that saw the Winklevoss twins receive a $65 million settlement.
In yet another similar case, a guy known as David Wawrzynski came up with a design for a condiment container that made it possible for people to either dip or squeeze their sauce.
Eager to make money off his invention, David went and pitched his idea to Heinz, the sauce giants.
After showing some initial interest in the design, Heinz later told David that his design was not commercially viable.
A few months later, Heinz released an almost similar condiment container, leading to the inventor suing them for stealing his idea.
Stealing of ideas is not a new thing either. In 1964, an inventor known as Robert Kearns came up with designs for the intermittent windscreen wiper, an invention that gave drives better visibility by cleaning the windscreen every few seconds instead of doing it continuously.
Like the other inventors mentioned above, Kearns had to pitch his idea to someone if he was to make some money from it.
In this case, he pitched his design to three big automobile companies: Chrysler, General Motors, and Ford. All of them showed no interest in his idea.
However, shortly after, all three made implemented the intermittent windscreen wipers in their cars. Kearns eventually sued Ford and Chrysler and won.
As the above stories show, people and companies you pitch your ideas and inventions to are not your friends.
Some of them will try to work around you and make money off your ideas while leaving you out in the cold, and therefore you need to be cautious when engaging them.
Below, we look at 11 ways to stop companies from ripping off your idea or invention.
DON’T SHARE YOUR INVENTION WITH JUST ANYONE
Social media has become a major part of our lives today.
People routinely use social media to share their thoughts, express their love to their partners, wish their friends happy birthdays, sell items they no longer need, find something they are looking for, look for jobs, showcase their expertise in something, find love, and so on.
With so much dependency on social media, it is not unimaginable that some people will think of sharing their awesome invention or idea on social media with the hope that the right person to help them bring the invention to market will find them.
Don’t fall into this temptation.
The risks that come with sharing your invention or idea on social media far outweigh any potential benefits. In other words, there is a higher likelihood of someone stealing your idea off social media than of finding someone who will help you implement your idea.
In addition, sharing your idea or invention on social media might also nullify any intellectual property rights you hold over your invention.
For instance, by using Facebook, you automatically agree to Facebook’s “Statement of Rights and Responsibility.”
Part of this statement states that by posting any content that is covered by intellectual property rights on the website, you grant Facebook “non-exclusive, sub-licensable, transferrable, royalty-free worldwide license” to use the content as they so wish.
In other words, Facebook can copy, use, modify, distribute, display, or create derivative works from your intellectual property.
They can do this until you delete the content, provided the content was not shared with other people.
By posting your idea or invention on social media, you are basically ceding your rights to the idea.
Aside from social media, you should also be very careful with the people you share your idea with in real life. Not everyone within your circles is interested in what’s best for you.
The person you think is your friend can easily steal your idea and find someone to help them implement it.
Therefore, if you are not considering partnering with someone to help bring your invention to reality, or if a person is not going to help you improve your invention in any way, don’t tell them about it.
DON’T REVEAL TOO MUCH
Of course, if you want to make money from your invention, you have to tell someone about it – you might want an investor to provide you with capital, a manufacturer to help you produce it, or someone you are interested in licensing the invention to.
You have to share some details of your idea with these people, but this is not a guarantee that they will actually agree to partner with you.
To protect yourself in case they do not buy into your invention, don’t reveal too much information about your invention.
So, how do you keep the important information to yourself while still managing to show the worth of your invention and convincing them to take a financial risk in the invention?
A good approach is to talk about the problem your invention or idea solves and show them why this invention or idea is potentially profitable, while keeping the details of how it works to yourself.
If they are interested after you show what problem it solves and its potential profitability, it becomes easier to get them to sign a non-disclosure agreement (NDA) before you reveal the technical details.
APPLY FOR A PROVISIONAL PATENT
After coming up with a new invention, the best way to protect the invention is to get a patent for the invention.
However, there are two major problems with this approach.
First, patent applications are a costly affair. For a creative or entrepreneur without the cash to your invention to market, applying for a patent might also be outside your budget.
Second, it might take quite some time before your application gets approved. The workaround for this is to apply for a provisional patent.
The provisional patent is a lot less costly, you don’t have to wait years before your patent is approved, and allows you to protect your invention or idea up to a period of 12 months.
It is good to note that there is no option of renewing the provisional patent after the 12 months.
You need to have filed for a non-provisional patent within that period, or else the patent pending status of your invention will expire, and someone else can file a patent for the same idea.
So, what’s the benefit of filing for a provisional patent? When you apply for a provisional patent before disclosing your invention to a potential investor, they cannot commercialize the invention, since they would then be infringing on your provisional patent.
In addition, having a provisional patent shows anyone thinking of ripping off your invention that you are serious about protecting your legal rights to your invention.
When filing for a provisional patent, include detailed information about your invention, including its technical details, how it works, what its benefits are, and so on.
UNDERSTAND THE INTELLECTUAL PROPERTY LANDSCAPE IN YOUR FIELD
If you intend to file for a provisional patent for your invention, you need to do a research of all patents around your invention and try to identify what makes your invention different from any other existing patents.
Without such a differentiation, your patent application can be easily rejected on the argument that there is prior art, which means that there is evidence that your invention is not something new.
However, even if there are other similar inventions, there has to be something that has kept them from making it to the market.
If you identify what makes your invention different from other similar inventions, you can make this point of difference the basis of your patent application or intellectual property.
USE A NON-DISCLOSURE AGREEMENT
A non-disclosure agreement is another great way of protecting your invention before you reveal any details about the invention to investors, associates, workers, or anyone else you might be partnering with to implement your invention.
Like the name suggests, the non-disclosure agreement bars anyone who has signed it from disclosing any of the information contained in whatever is covered by the agreement.
After signing a non-disclosure agreement, if a person later goes on and uses the information pertaining to your invention without your authorization, you can take them to court and sue for damages.
A non-disclosure agreement is legal contract like any other.
An NDA also provides grounds for arbitration in case of a dispute.
When settling disputes arising from a stolen invention or idea, an arbitration is the best course of action, since it is a confidential process.
If the case were to be settled in a standard litigation, you would have to reveal information about your invention to an open court, which beats the purpose of the whole process.
If you share the general details of your invention as we discussed in step 2 above and they request for the technical details of your invention, you can have them sign the NDA.
When it comes to this, one mistake I see a lot of people making is to find non-disclosure agreement templates on the internet and use them as the basis of their own agreement. Don’t do this.
Find a licensing attorney and have them draft an agreement that will cover your specific needs. Ensure that the NDA covers your invention as well as any improvements to the invention, or any reverse engineering to the invention.
While the format of a non-disclosure agreement might vary, most of them contain three main elements:
- A definition of what constitutes confidential information: The NDA should define what information pertaining to your invention or idea should be considered as confidential or trade secrets. The non-disclosure agreement should also spell out any information that is not covered protected by the agreement, which means that the receiving party is under no obligation not to use the information or to keep it to themselves. Any information that was created or discovered before the company got involved with you is not covered by an NDA. Only information that is specific to your invention or idea should be treated as confidential.
- Obligations of the receiving party: The NDA should also describe what is expected of the party receiving the information, after the information is shared with them. In most cases, the NDA places the receiving party under obligation to hold the information in confidence. It also places restrictions on how the receiving party can use the information. In most cases, a company that has already consented to signing an NDA won’t have any problem with the obligations set out by the NDA.
- Applicable time periods: An NDA should also define the length of time during which the information should be kept confidential. In most cases, the appropriate length of time is reached through a negotiation, because each party has different interests. The disclosing party will usually want the information to remain confidential for a long period of time, while the receiving party will want the period to be short. A common applicable period within the United States is five years, though some companies might try to bring it down to two or three years. In Europe, the applicable time period might be as much as a decade.
It’s good to note that some investors might not be interested in signing a non-disclosure agreement.
Since investors come across a great deal of ideas and pitches, some of them might not want to expose themselves to lawsuits in case someone else approaches them with an idea or invention that is similar to yours.
Considering the balance of power is in their favor, sometimes you might be forced to share the details of your invention without them signing any NDA.
RESEARCH THE RECIPIENTS
We have already seen that not all potential investors or clients will be willing to sign an NDA with you.
To try and protect your idea as much as possible when you have no legal mechanism protecting you, you need to research your potential investors or clients and try to determine whether they are the kind of person/company that would try to rip you off.
When researching them, ask yourself questions like: What is their reputation when it comes to dealing with inventors?
Do they have any current or past disputes with their business partners?
Are there any complaints from people who have previously worked with them?
If you come across some red flags when conducting your research, it might be a wise to avoid getting involved with them.
Someone who is interested in stealing your idea will try to do it even when you have put in place legal mechanisms – such as provisional patents – to protect yourself.
Therefore, if you want to minimize the chances of your idea getting stolen, you need to identify any loop holes that others might exploit.
If you wanted to steal your invention from yourself, how would you do it?
If you identify any loop holes that might be used to steal the invention from you, file additional provisional patents to cover these loop holes as well.
For instance, if you can go around your current provisional patent by changing the material used in your invention, file an additional provisional patent covering other materials that might be used to produce a similar product.
Sometimes, you might even need to hire a special engineer to help you determine ways that people can work around your patents.
However, this will strengthen your provisional patents and make it much harder for others to steal your idea.
FILE FOR A COPYRIGHT CERTIFICATE
Sometimes, whatever you want to share with an investor might not be a physical invention, but rather an original idea or an artistic work, such as a dramatic, literary or musical work, a novel, script, poetry, computer software, architectural concept, and so on.
While you won’t be able to get a patent on such, you can still protect them by filing for copyright protection.
To get a copyright certificate issued, you have to set whatever you came up with in tangible form.
For instance, if you came up with an idea for a novel, you have to create a manuscript for the novel in order to be issued with a copyright certificate.
Once that is done, no one has the right to reproduce or use your work without your authorization.
Note that you won’t receive a copyright certificate on an idea that has not been put in tangible form.
Documentation is always a very important step when you are dealing with anyone who is interested in your invention or innovative idea.
If you have a meeting with them, get a copy of the minutes of everything that was discussed in the meeting, or take down notes of everything that is discussed.
If you discuss anything on phone, follow up with an email detailing everything you discussed.
If you provide any documents to them, note down what documents were handed over and the exact date and time that this was done.
This helps you create a paper trail that can come in handy in case there is an infringement dispute that requires you to go to court.
FIND A GOOD ATTORNEY TO HELP YOU WITH INTELLECTUAL PROPERTY
While you can navigate the process of getting legal protection for your intellectual property by yourself, it is far much better to find a good attorney to help you with the process.
Not only does this make the whole process easier, it also ensures that there are no loop holes left for unscrupulous companies and investors to take advantage of and go around your legal protection mechanisms.
If possible, find an attorney who specializes in your field, and one who has a proven track record of getting patents issued.
FOLLOW YOUR INSTINCTS
Sometimes, despite all your best efforts to protect yourself from people who might be planning to rip off your idea or invention, you might still feel your instincts warning you not to trust the person or company.
Very often, our instincts are right, and if you feel your alarm bells going off whenever you think of working with or partnering with that person or company, it might be wise to listen to them.
As the saying goes, better safe than sorry.
Of course, the more experienced you get, the easier it will become for you to distinguish those who are genuinely interested in investing in your invention or idea from those who are only trying to rip you off.
While the odds of someone you are pitching to stealing and commercializing your idea or invention are not very high, this does not mean that it cannot happen.
Therefore, it is a lot better to take steps to protect your invention rather than go in solely on trust, only for someone to steal your idea and leave you with no recourse.
If you are concerned about someone ripping off you invention, the strategies discussed above will help protect you and give a little peace of mind as you look for potential investors and partners.
In San Mateo (CA), we meet CEO and Co-Founder of Neo4j, Emil Eifrem. Emil talks about his story how …