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Small Business Resources
Hello, I've got an idea for a product which would use the technology from another company. Their current product line is totally different from my idea but I feel their materials & manufacturing would lend itself to my product. I want to protect my idea but at the same time talk to the company about any possibilities. How can I do both (within reasonable costs), without the risk of them stealing it?
Hi Gary, Thanks for your question. It sounds like an interesting opportunity. Let me start with a general observation for people who hold their ideas close for fear of people stealing them. Now, as a former lawyer, I am certainly a fan of protecting your interests. You should speak to a lawyer about getting appropriate non disclosure agreements before engaging in detailed discussions with potential partners. Having said that, the paranoia that people with ideas have about someone stealing their ideas is generally unwarranted. In particular, professional investors you may be approaching for money may be unwilling to sign such an agreement. Why? They get hit up all the time. They may have already invested in another similar idea or someone else may come forward with a similar idea and they don't want to get sued for doing a good deal with someone else. The second reason to lighten up with financial investors is that most sophisticated investors don't invest just in the idea; they invest in the person. They don't have time to go out and commercialize an idea themselves. They want someone else to do it. If you appear to have the skills and attitude to do the job, they may invest in you and your idea. If you don't, they won't invest in you even if your idea is brilliant. I point this out because I have seen people sit on a great idea for a long period of time out of fear of someone pilfering their precious brainstorm. But they don't have the ability, connections or financing to commercialize the idea themselves. As a result, their idea goes nowhere. By all means protect yourself, but recognize that somewhere along the line, you will have to take a risk. And I am speaking as one who has pitched ideas that were not taken, even without a confidentiality agreement and have had an idea stolen despite certain agreements in place. Would I disclose again, given that negative experience? Absolutely, because without taking the risk, it would have remained but an idea. As it stands, even though I was not compensated, there is a business based on my idea and research that now employs many people and adds positively to the local community. (And as a side note, the people who did manage to exploit my idea were ultimately booted out by investors.) Having said that, I would now perform much more due diligence on the people I was considering partnering with and tightened up the agreements. Now, in your case Gary, the people you need have technology that they are currently using. That suggests the distance for them to travel to take your idea is shorter. However, if they are in a completely different industry, they may not wish to lose focus on their core business. But you are wise to try to protect yourself. However, you need to approach this strategically and with an understanding of where they are at. Right now, you need them more than they need you. They are not actively looking for your idea. So if you walk in saying "I have a great idea, but you must sign my agreement", they are likely to just show you the door. So take this in stages. First, be clear in your own mind what you are looking for. Do you want access to their production capacity; do you want to license their technology; do you want some kind of business partnership with them; or do you just want to sell them your idea? You may be open to more than one of those. Approach them first about whether they are open to considering applications of their technology beyond what they are currently doing. Ask them if they are looking at anything outside of their industry. If so, try to get a sense of what industries they are looking at. You will tell them that you have an application of their technology outside their present focus and just wanted to know if they are interested in hearing about it. If so, set up a time to chat. If they are agreeable, then say propose a some kind of mutual non-disclosure agreement (NDA) so that you each feel comfortable talking about your respective contributions. In that way you are not just looking at your own interests, but theirs as well. With respect to costs, I can't imagine a single draft NDA would be that expensive. But that is a question properly reserved for your lawyer. Cheers, Warren
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