Many intangible business assets fall into one of the protectable categories of intellectual property. Distinctive branding features or inventions, for example, would be protected as trademarks or patents. However, mere ideas (at least before they have been executed) can be difficult to protect legally.
Copyright, for example, only protects the expression of ideas (once they have been recorded or fixed somehow) and not the ideas themselves. This is known as the idea-expression dichotomy. In other words, it will only protect the output of the idea and the way that idea is expressed, not the idea itself.
To help you understand Intellectual Property (IP) law, we’ve answered some of the most common questions we receive on the topic.
What are the methods for protecting a business idea?
There are several methods you can use to safeguard your commercial idea, namely:
- Non-disclosure (confidentiality) agreements
- Trade secrets
- Design rights
You may also be able to rely on the common law protection method of ‘passing off’ if you have not registered a trademark.
How do I register a business idea?
Confidentiality agreements (which are also used to protect trade secrets) are legal contracts. If one party breaches the terms of the agreement, you can bring court proceedings against them to obtain an injunction and/or damages.
Copyright and unregistered design rights arise automatically upon creation so long as they’re recorded, or in the case of the latter, an article has been made to the design.
Design rights, trademarks and patents can be registered at the Intellectual Property Office. If you wish to protect your business idea outside of the UK, you will need to apply to international agencies such as the European Union Intellectual Property Office (EUIPO) or the United States Trademark and Patent Office (USTPO).
In most cases, protection is granted for a limited period (for example, a patent usually is 20 years from the filing date of the application). However, this can still vary depending on the office you register the protection with.
What are the benefits of protecting a business idea?
There are several benefits to protecting your business idea:
- Enhance the market value of your business
- Turn ideas into profit-making assets
- Market your business' products and services
- Enhance export opportunities for your business
Should I have an NDA?
In the initial stages, it’s important to be selective about who you share your business ideas with. That is because confidentiality is the only tangible way to protect an idea.
English common law automatically dictates that a person who has received information in confidence cannot take unfair advantage of it without the discloser's consent.
However, it’s always advisable to have a written Confidentiality Agreement (or Non-Disclosure Agreement / NDA) in place to ensure the recipient is contractually obliged to keep the information confidential.
Doing so avoids problems of falling back on the default position and proving that the information disclosed was confidential and that the recipient knew or ought to have been aware of that fact.
What is a trade secret?
Trade secrets are a specific form of confidential information that is commercially valuable, treated as secret (or known to a small group of people) and gives the owner a competitive advantage.
Probably the most famous examples are the recipes for Coca-Cola and KFC. However, trade secrets include innovative technologies, secret formulas, technical know-how, source codes, algorithms, sales methods, manufacturing processes, and customer records.
This list is not exhaustive - it could cover whatever is non-public and sensitive to your business and can include a broad scope of information assets.
How to protect your business idea without a patent?
Trade secrets can serve as a helpful substitute or complement to patents.
Firms often choose trade secrets to maintain a competitive advantage, especially when an invention is not eligible for a patent or when the inventor does not wish to disclose the secret publicly (which a patent requires you to do).
Being free, they also provide a relatively low-cost protection mechanism.
Crucially, because trade secrets and confidential information lose their protection if they fail to remain secret, valuable, or reasonably protected, active steps must be taken to keep the information private.
The best way to do that is to store it safely (for example, by using encryption software), to ensure that only those people necessary have access to it, and ask whoever you’re disclosing the information to sign an NDA before you give them access to that information.
Doing that will put them on clear notice that you consider that information confidential. If it’s well drafted, it should define the specific permitted purposes for which they can use and evaluate that information.
What happens if a business idea is stolen without IP protection?
The answers to this question depend on what, exactly, was stolen.
An idea by itself is not protectable, but when the same idea is expressed in a drawing or prototype, it demonstrates how this invention works and might be protectable under patent laws.
So, if you have, for example, presented an idea to a company without actually writing that idea down, naming it, or acquiring a patent on it, then you’re likely out of luck if they copy it.
Suppose this idea is copied by a company you presented it to and did not sign a nondisclosure agreement (and your idea is not protected under intellectual property laws). In that case, you will likely have difficulty establishing "ownership."
However, you still may be able to argue that a confidential agreement was implied if:
- The company solicited the idea from you—that is, you sent the information in response to its prompting
- You indicated that the invention was a business proposition—in other words, that you hoped for payment
- The information is a trade secret that has commercial value and is not known by competitors
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Protecting your business's ideas is critical if you have a unique product or proposition. As we’ve just discussed, there are many different legal protections available and choosing the right form of protection can be tricky if you’re unsure about how either NDAs or IP law works.