As a special feature of our blog –special guest postings by experts, clients, and other professionals –please enjoy this blog entry about protecting business ideas by technology lawyer and IP strategist Joren De Wachter. Joren serves as a Vice Chair with me on the ITechLaw Intellectual Property Law Committee and has an excellent blog of his own on current technology issues. Enjoy Joren’s article
-Robert Milligan, Editor of Trading Secrets
Congratulations! You have come up with this great business idea, and you are developing a way to bring it to the market.
But you need things. You need business partners, distribution partners, customers, maybe even investors.
So how do you protect your business idea? How do you make sure other won’t steal it? Here’s some essential guidelines on protecting your great business idea.
1. What is an idea?
An idea is just that. It’s an idea, not a business.
Great ideas are never stolen, because they are not secret. They have always been around for some time. Google did not invent the idea of Internet search. Facebook did not come up with the idea of social media. Skype did not come up with the idea of video-phone over the Internet. Apple did not invent the iPad, it only significantly improved the execution.
And that distinction, the distinction between an idea and its execution, is crucial.
When we talk about “protecting”, we typically think of Intellectual Property Rights (“IPRs”). And IPRs (patents, copyright, designs, etc) never protect ideas. They protect expressions of those ideas. They protect they way the idea is executed upon, and the way the idea is made into a concrete product or service in the market.
So don’t worry to much about your ideas. When, after a lot of hard work, those ideas are slowly turning into a product or service, that’s when you should start thinking about protection. But typically not at the level of ideas.
And besides, when you have a brilliant insight, it’s much more likely that someone else of the 7 billion on this planet had it before you.
But that’s OK, because the value is in the execution, not in the idea itself.
2. What is great?
What is a great idea? It’s an idea you can execute upon, an idea that addresses a pain or need in the market, an idea that other people will recognize as great.
What that means, is that, by and large, the only way you will find out if you have a great idea, is to talk about it.
To check it out, discuss about it, with potential partners, potential clients, potential investors.
Until and unless you discuss your idea, you won’t know if there’s an actual market for it.
Except if you don’t really care whether you have customers and can build a business, it is not a good idea to hide your idea away, and build a product and service on that secret idea, without first checking if there is a demand.
And the only way to check if there is an actual or potential demand, is to share your idea with others.
What’s more, others know things you don’t. If you share your idea, they will come up with additions, new viewpoints, interesting suggestions, all things you wouldn’t have thought if you had kept your idea secret. It will strengthen not only your idea, but, much more importantly, your business model and the execution you will give to your idea.
And don’t be afraid, they can’t steal your idea. You don’t “own” it anyway, you’re just using it to build a product or service that you want to bring to the market.
And when a product or service is based on a great idea, the chances of your success are greater.
3. What is protection?
When we talk protection, we talk IPRs.
As I said before, IPRs only apply to the expression of ideas, not to the idea itself.
It is the effort you put into converting your great idea into a product or service that you can offer in the marketplace that you can potentially protect by IPRs.
But what does protection mean?
First, and this is essential, IPRs do not give you the right to exploit your innovation. IPRs only give you the right to prevent others from producing or distributing a copy of your innovation.
That difference may sound trivial, but it is not.
It means that protection is a negative right, not a positive one. When you obtain IPR protection (which may be essential for your business model), you obtain the right to block other people from doing certain things. Typically those things relate to copying or distributing the concrete expression of your idea.
But it will not necessarily guarantee that you can actually use yourself your idea (your IPR does not, per se, invalidate someone else’s IPR), and it does not guarantee that others won’t develop their own expression of your idea.
So, while protection is great, its importance can easily be overstated. Protection is a tool, not a purpose.
One of the important questions you will need to address is whether protection is actually appropriate for your business model, what it is you want to protect, and how you want to use that protection. And remember, in this field, as in any, return on effort is the most important parameter.
A final point on protection: since IPRs are negative rights, their use is actually fairly limited. There are three main ways to use IPRs: offensive, defensive, and to impress investors.
Offensive use of IPRs is what Apple is currently doing: it is suing a lot of competitors to block their access to the market, or get them to pay a license fee to protected technology or designs.
Such use of IPRs is actually very expensive. Rumours mention amounts of several dozens of millions of Euros spent on these programs of litigation and enforcement.
While there may be a positive return on investment, it is unlikely to be a good business strategy for a startup. As a rule of thumb, this kind of strategy is not uncommon for larger, established businesses.
Defensive use of IPRs is using your IPRs to counter an attack from a competitor, who uses an offensive strategy (see above). Some kind of mutual partial destruction strategy. The typical result, after a lot of legal fighting, is often a cross- license. Here, the IPRs are used as a retaliation capability in case someone attacks you. But note, again, how the IPR itself will not give you the right to exploit the innovation you want to bring to the market.
Not much needs to be said about the third use of IPRs – it speaks for itself.
4. When is an idea yours?
The regime of IPRs is technical and complex. There is no simple approach to them – that’s an unfortunate fact. The main reason for this is that IPRs are highly contextual.
But at the same time, IPRs are an essential structure of how you build a business model around the innovation you want to bring to the market.
IPRs will determine what rights you will grant to your customers; they will determine which rights you obtain upstream from your suppliers; they will influence whether you choose for an open (e.g. open source) or more closed model, or a hybrid in-between.
IPRs will determine your freedom to operate, but also indicate how to best use that freedom, so that you can find the right way to structure your business.
And that question of IPRs needs to be solved before you make your final decisions on how to structure your business and bring your product or service to the market.
In other words, before you start selling, you need to know what is yours, and what is not – and to what extent.
5. So, where’s the business?
In the end, that is the key question.
Ideas are not bought and sold. It is products and services that are bought and sold in the marketplace.
Protecting a business, and the IPRs in that business in a way that supports the business model, are an excellent idea.
But those IPRs don’t make the business itself.
First build the business case, the business model, and the revenue model. Integrate in those models the information about what can be protected, how it should be protected, and how that will support and construct your business model.
Then build your business. And the value of that business will be in the way you execute your idea, rather than in the idea itself.
Good luck with your business.
Joren De Wachter is an experienced IP strategist, with a focus on ICT technology businesses. He can be reached at firstname.lastname@example.org