Ideas And Their Protection

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq., owner of Ask The Business Lawyer, is an award-winning business attorney, speaker, and Entrepreneur Magazine online contributor. She saves consulting and professional services companies time, money, and aggravation by serving as their outsourced legal counsel.

Posted on June 2, 2015 in IP & Social Media

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Q: I’m an independent/freelance software developer by profession. Over the past last few months I came up with an innovative idea for a web-based-to-mobile-device business solution.  I’ve tested it and, suffice it to say, it works.  I was contacted by one of the leading global telecommunication giants, who expressed interest in talks that might reveal ”synergies in going forward.”  My concerns are:

  1. To what legal extent can a business owner/creator/founder maintain control when the business becomes “larger” than the individual?
  2. How can I protect my intellectual property?  What would prevent others from developing the same solution in other parts of the world?
  3. Given that this would appear to be a global opportunity, what checks and balances can be put in place when developing a strategic partnership?

A: This question came to me from an eager and seemingly successful entrepreneur based in Kenya. (I love questions like this, especially when people want answers for free.) 🙂

Let me start by saying that anyone in a position of doing business globally will be best served by having a face-to-face consultation with a local attorney (not one based in another country) who has experience with international transactions.

Now, on to answering the questions:

1.  The extent of control that the owner of the business maintains can depend on a number of factors. An important factor will involve the extent to which the owner needs outside capital in order to more fully develop the product and get it to market. If the owner will be seeking outside capital (and not just a bank loan), the extent of control the owner maintains over the business is an issue of negotiation with equity investors. That can depend on the amount of money invested, the management style of the investor and the extent to which the owner needs to maintain flexibility for bringing on additional investors. If your company will be formed in Nairobi, Kenya, you will be best served by speaking with a local attorney who understands these issues.

2. Generally, patent protection is obtained on a country-by-country basis. There is nothing that can prevent others in other parts of the world from independently developing the same product (obviously, provided that their development of the product does not involve reverse-engineering yours).  Some countries are party to international patent treaties, which is why it’s best to consult with an attorney who’s familiar with this area. The attorney may be able to help determine which countries will provide the most advantageous patent protection.

3. Anytime an entrepreneur enters into negotiations for the marketing and distribution of a prospective product, there is a risk that your negotiating partner might not act ethically and might cut you out of an eventual licensing deal. One of the ways to combat this is with a confidentiality and nondisclosure agreement. In addition, your intellectual property protection strategy–and the extent to which you have begun that process–will play a key role in determining your negotiating leverage.

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