I get it. You are a start up or maybe an established company looking for more capital for projects, infrastructure, operating expenses, whatever. You want to protect your intellectual property (your copyrights, patents and trademarks) but you also really want or, worse, really NEED to raise money from investors and are hesitant about disclosing your idea, which would entail disclosing some intellectual property information. Well hopefully this blog will give you some insight as to WHY you shouldn’t disclose your idea, WHEN you should and HOW you can protect your intellectual property as much as possible during those critical times in which you are raising capital for your business or venture.
Why NOT disclose your idea?
It seems pretty obvious right? You don’t want others stealing your idea! But it goes even deeper than that. If you disclose your idea to anyone at any time, you are risking forfeiting your right to claim that intellectual property now and/or in the future. The area of intellectual property law is one that is complicated and requires the advice of experienced counsel. But before you hire your intellectual property (IP) attorney, be advised that disclosures of ideas could prevent you from patenting, copyrighting or trademarking any or all of your idea or ideas in the future. So get an IP attorney (we can recommend some) and prepare!
Why you may NEED to disclose your idea?
I know the above paragraph just finished scaring you into not wanting to give out ANY of your intellectual property information. But you will also note that I advised you seek a good IP attorney (again, we can recommend some) and prepare! I say prepare because there may well be situations in which you need and MUST disclosure intellectual property information—such as soliciting savvy individual or institutional investors. In those cases, it’s unlikely that an individual investor, let alone an institution, will sign any non-disclosure documents drafted by your business attorney. But not to worry! See the next paragraph.
Obviously this may seem like a self-serving blog post but the reality is I can’t change the harsh reality that you need an attorney during these circumstances, preferably an IP attorney (which I am not but…I can provide recommendations). Generally speaking, IP attorneys are very specialized in the area of intellectual property and many have special licenses and experiences that will make your experience much smoother in navigating intellectual property laws. You should already have a good private equity attorney (which I am) on payroll handling the day-to-day operations of raising capital the right way but a good IP attorney shouldn’t be far behind.
Here are some things that you can do to protect your IP information during the money raising process:
- Execute confidentiality and non-disclosure agreements. For the reasons stated above, good luck with that.
- File a patent application. It mitigates prior disclosure consequences and is sounds GREAT in your pitch to investors to say you have a “patent pending.”
- Register trademarks and copyrights. Yes it can be expensive and time consuming. But pick your battles—either pay NOW or pay LATER (when it may be too late to fight.)
- Emphasize the confidential nature of conversations and documents. Water mark your material with “CONFIDENTIAL” and reemphasize that confidential discussions before, during and after in person or online meetings.
These are just small steps in an overall plan that you should work with your team, particularly your private equity attorney, to make sure that you are protecting your intellectual property rights while at the same time raising capital. You can do it! Good luck with your next capital fundraising plan and make sure you do it the RIGHT way!
NOTE: I will be discussing this subject in detail during my “Power Raisers” weekly conference call this Monday (Aug. 10th) at 11 am with special guest IP Attorney Clark A. Wilson. Visit the News & Events section of my website for more information and see flyer below.