Protect your great ideas
Don't get caught in your new mouse trap
Tom Bolt
It is one thing to daydream about a great idea, like a new and better mousetrap that will make you millions, but quite another to turn it into a profitable venture.
If you’re trying to license the rights you run the risk that some rat may steal your idea. Here are a few pointers to avoid being caught in your own snare.
If you believe you have a million dollar idea, you should disclose this information only to an intellectual property attorney. Any patent may be deemed worthless if it can be proven your idea was already in the public domain.
To make money from your invention you must generally license the rights to another business, often a manufacturer or distributor. But in promoting it to potential licensees, you run the risk of disclosing so much information that the invention may be stolen or no longer protected by law.
The “Uniform Trade Secrets Act” a new law recently enacted in the United States Virgin Islands stipulates that if you reveal your secret to the public, you lose your rights to the secret. In other words, once you’ve disclosed the idea, you can no longer claim you have exclusive rights.
Under patent law, if you disclose details of an invention to the public before obtaining a patent, you must apply for patent protection within a year of making the disclosure. If you don’t, the invention will no longer be patentable and anyone can use it. If you have filed a provisional patent application, you still must file a regular patent application within a year.
So how can you discuss your invention with potential business partners without jeopardizing your rights? If your invention potentially qualifies for a patent, it may be worthwhile to file a provisional patent application and obtain “patent pending” status. Most often, this will deter copycats.
If you determine your idea is not patentable, the best way to protect yourself is to have prospective licensees sign a nondisclosure or confidentiality agreement before you disclose any secrets. If someone signs a nondisclosure agreement and later uses your secrets without authorization, you can sue for damages.
Nondisclosure agreements vary in format, but are generally signed by two parties, acknowledging that the other is disclosing an idea to one party. This includes the understanding that the party being shown the idea will not use it or disclose the information, without the written approval of the other party.
Every nondisclosure agreement provides a definition of the confidential information. It is not protected if it was created or discovered before or independent of any involvement with you.
The person you’re sharing confidential information with generally must hold the information in confidence and limit its use. The “Uniform Trade Secrets Act” provides that the receiving party cannot breach the confidential relationship, induce others to breach it or induce others to acquire the confidential information by improper means. Most companies accept these obligations without discussion.
It’s always safest to get a prospective licensee to sign a nondisclosure agreement, but you may not always be able to convince them to do so. When that happens, you are left in a vulnerable position. If you disclose crucial information without the agreement, you risk losing your rights. If you don’t disclose it, you risk losing a business opportunity.
Consider the reputation of the person or business you’re dealing with. If there is a questionable reputation, the dangers of losing outweigh the business opportunity.
Be wary and consult with an attorney experienced in intellectual property lawyer. He or she can advise you how to solicit business partners, while protecting your rights.
Tom Bolt is managing attorney of Tom Bolt & Associates, a law firm in St. Thomas, specializing in real estate and finance.
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