Brad Frazer, The Daily Record Newswire
Perhaps you have an idea that you are passionate about and really want to do something with. A better mousetrap or mobile phone app, or maybe clean safe practical working nuclear fusion. Then what?
Experience teaches that almost everyone with an idea wants to sell it. Enticed by those late night infomercials featuring George Foreman, countless people have been seduced into thinking that their ideas are salable and that they can retire based on the strength of their great new concept. But the sad truth is that companies do not buy ideas.
There are many reasons for this, but the most cynical is that they do not need to. Ideas become free research and development if they are submitted to a company based on the belief that the company will behave ethically and pay if they want to use it. If you doubt this, take a look at many website Terms of Use that contain an “Unsolicited Idea Submission Policy.” In 99 percent of cases, it states the company to whom you submit the idea will own it, thank you very much. Idea lost, and you have no legal recourse (more on that later).
I used to work in a technology company that followed extremely ethical practices when it came to unsolicited ideas for product improvements or new inventions—we threw them away. That’s right, when we received an unsolicited idea (except in special cases, discussed below), we’d throw it away. We were a big company, and it was possible that at some time prior we had signed a non-disclosure agreement with the idea-submitter, but over time that NDA had been lost. If so, and if we used the idea, we were setting ourselves up for a lawsuit, and it was just easier to throw away the unsolicited submission. But not all companies act that way (remember: free R&D).
In neither case (the “toss it” example or the Free R&D example) did the idea-submitter “sell his idea” and make a boatload of cash. It just does not happen. (Attention haters: please email me all your counterexamples, but only if you are sitting on your yacht in Bermuda.)
So, what do you do with that grand idea? Five recommendations:
1. Remember that anyone to whom you tell the idea may lawfully (even if not ethically) appropriate it and use it unless you have an ISSUED patent, a signed NDA with them or both. So, be circumspect.
2. Make sure you actually own the idea. Intellectual property law in the United States is very arcane regarding who owns the rights to an invention (including patent rights and copyrights). When you tell the idea to people and they give feedback, they may become co-owners.
3. File timely patent applications. The U.S. is a “first-inventor-to-file” patent jurisdiction, so timely patent applications are critical. Moreover, many companies WILL look at an idea that is subject to either a pending patent application or an issued patent since inventorship is determined and objectively verifiable. Plus, if they steal it at that point, you will have a better chance of legal recourse.
4. Determine the best way to monetize the idea. Do you want to build a business around it and sell the business to Apple or Google in five years? Do you want to get a patent only and sell or license the patent? These are very different and require different planning at the outset.
5. Remember to lock down the ancillary intellectual property that supports your idea: trademarks, domain names, copyrights, social media and trade secrets. It will devalue your idea to have a patent on the functionality, but not own or have protected the copyright in the source code that runs the invention!
“Nobody buys an idea.” I believe that’s true, but if you protect and nurture and plan for that idea’s future, you can monetize the fruits of your labors and enjoy
that yacht in Bermuda.
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Brad Frazer is a partner at Hawley Troxell where he practices Internet law, publishing law and copyright law. He is a published novelist and a frequent author of Internet content. He may be reached at bfrazer@hawleytroxell.com.
