Can potential investors steal your idea?
Tales about devious investors conniving to take advantage of aspiring entrepreneurs have been circulating in the tech community for a while. Most founders dismiss such stories as urban legends, but in fact, some VCs do steal ideas from early-stage startups to boost their own struggling portfolio companies.
An NDA is a legal contract that binds the parties to keep confidential any information that is disclosed during the pitch. It also defines the scope, duration, and obligations of the confidentiality. An NDA can deter investors from stealing or sharing your idea, or from investing in a competing startup.
Ideas are most likely to be stolen when action has already taken place — there is a vision and plan on paper. Several examples showed ideas being stolen when a plan-of-action, proof-of-concept, and research were attached to it. If you give someone a treasure map don't be mad when they follow it.
To protect your interests, consider two common strategies employed by inventors, amateur and professional alike. First, you can file a provisional patent application (if your invention is patentable). Second, you can use a nondisclosure agreement (regardless of whether it is patentable).
The sooner you take action, the better your chances of success will be. You should speak to a lawyer as soon as possible so that they can help you take legal action. In addition, you should try to gather as much evidence as possible to prove that the idea was stolen from you.
Intellectual property can be protected in four main ways: Patent law, copyright law, trademark law and trade secret law.
Other ways to protect an idea without a patent are nondisclosure agreements and contracts. Utility patents are also a great option, but you should make sure you research the law before pursuing any form of intellectual property.
Under US Copyright law, you cannot sue if someone stole your idea. Copyright law does not protect ideas. It only protects the expression of that idea. So the first thing you need to do is to fix your work in a tangible medium of expression (e.g., saving your work in Microsoft Word).
Unless you are known in the industry for coming up with million-dollar high concepts, it's not likely you'll experience idea theft. And while, sure, someone can steal your idea, they can't possibly execute it or interpret it in the same way you can. No one can be you. That is your best protection of all.
Most investors that you will be pitching to, like for example accredited investors, institutionalized investors like venture capital or angel investors that are well-known in the industry – those kinds of investors aren't there to steal your idea. That's not what they do.
Can you sue for stolen ideas?
Ideas alone are not protected under intellectual property law. There are two primary ways that you would be able to sue the company for stealing your idea. The first is if you did, in fact, reduce the idea to a protectable form before telling the company about it.
Technically, yes, you can sell an idea to a company without a patent. However, this is where we circle back to entering into an NDA contract before sharing said idea, as mentioned previously. This would be your last line of defense to protect your idea, though, unfortunately, many companies won't enter into an NDA.
- Keep your idea secret before the pitch. ...
- Be careful selecting companies to pitch to. ...
- Reveal only what you must and nothing more. ...
- Create and document an extensive paper trail. ...
- Think about confidentiality. ...
- How to pitch an idea.
“Generally speaking, unless you have a federally registered copyright, you cannot sue for infringement. [That's different from] a trademark, where you don't need to have it registered with [the USPTO]; you can sue based upon common law rights,” Calmann says.
In the simplest terms, idea theft refers to stealing the work, effort, vision, and innovation of someone else and passing it on as yours.
A patent attorney will usually charge between $8,000 and $10,000 for a patent application, but the cost can be higher. In most cases, you should budget between $15,000 and $20,000 to complete the patenting process for your invention. Previous: Why should you file a patent application? Next: Is your invention valuable?
It is best to get help from a patent attorney who can assist you with drafting the application and navigating you through the processes smoothly. Also, a crucial step in the application is to ensure that there are no similar products such as yours.
The short answer is no. Unfortunately, despite what you may have heard from late night television commercials, there is no effective way to protect an idea with any form of intellectual property protection. Copyrights protect expression and creativity, not innovation.
You are not required to obtain a patent in order to sell a product or service embodying your invention. Many products and services are sold that are not patented. A U.S. patent provides the right to stop others from making marketing, selling, or importing your invention in the United States.
- Research the market. ...
- Read about patent laws. ...
- Detail the production process. ...
- Consider how you want to be paid. ...
- Understand the problem you're solving. ...
- Recognize the key benefits of your idea. ...
- Describe your target audience. ...
- Specify benefits clearly.
What to do if your intellectual property is stolen?
Contact Law Enforcement Right Away: Victims can maximize their legal remedies for intellectual property crime by making contact with law enforcement soon after its detection.
There are a few reasons why people might steal ideas. Sometimes, they are simply trying to be helpful. They may think that you are not serious about your idea and that they can do a better job of executing it. Other times, people steal ideas because they are insecure and want to feel like they are better than you.
Angel investors operate under a different set of rules. They provide you with the money you need to get going and, in exchange, they get an ownership stake in the business. If your startup takes off, then you both reap the financial rewards. If the business fails, the angel investor doesn't expect you to pay them back.
While it varies depending on the individual investor, the average return for an angel investor is thought to be around 20%. Of course, there are always exceptions to this rule and some angel investors have made a lot more (or a lot less) money from their investments.
Angel investor FAQS
Angel investors typically want to receive 20 to 25 percent of your profit. However, the amount you pay your angel investors depends on your initial contract. Hammer out these details before they give you any money, and have a lawyer draw up the agreement.
