How to protect your idea for Plan B
This New Year, you’ve got a great business idea - and you’re not going to give it away for free, are you?!
Why it pays not to share
So you had the ‘light bulb moment’ when the idea for the great new business, product or service came to you. But even if you are an independent-minded contractor, your natural inclination was probably to go and share your brainwave with someone.
Well if you haven’t already, don’t do it! At least, don’t share it until you have a proper confidentiality agreement in place to protect it, writes Sue Mann, a commercial solicitor at Cousins Business Law, a legal advisory for SMEs.
The same warning applies if you’ve spent ages developing your idea and now want to reap your rewards. You might want to sell the idea onto a developer. Or perhaps you need input from a designer, producer, distributor or other technical or commercial source to get the idea to market.
When to draw up a confidentiality agreement
The last thing you want is for someone else to get the benefit of all your hard work while you miss out. But that’s exactly what can happen if you tell anyone else without the protection of a thorough confidentiality agreement. This agreement should be signed by the person to whom you propose to disclose your idea before you disclose it.
Confidentiality agreements – what to include
The key points you need to consider in relation to a confidentiality agreement– also referred to as a non disclosure agreement or confidentiality undertaking, to protect your idea, include:
• Who will be receiving the information? You need to get the correct person(s) to give the undertaking to you, so check carefully whether you will be dealing with one or more individuals, a company or group of companies. Make sure you get the appropriate signatures and that employees, consultants and so on are covered where necessary.
• What confidential information will you be disclosing about your idea? This needs to be identified so that it will be sufficiently clear what is covered – but without actually giving away the confidential information before the agreement is signed.
• What will the recipient be allowed to do with your idea? Make it clear what can be done with what you disclose and – possibly more importantly – what cannot be done. For example, if the disclosure is purely to enable your idea to be evaluated with a view to the recipient buying the rights from you or taking a commercial licence, then you will need to spell out the limitations clearly, so that you protect your position for future negotiations.
A confidentiality agreement should also…
Other matters that you will need to consider include how long the agreement will last, when or how it will end; what will happen to any records of your idea, or copies of any designs or other materials.