Coming up with a killer business idea can be exciting. But don’t let your enthusiasm blind you to potential legal hassles that you might face as you try to put it together. Protecting yourself right from the start can save you a lot of time and money in the long run.
Get it in writing.
If you’ve created an agreement with someone – whether it’s a business partnership with your best friend or a one-time job with a freelancer on the internet – you need to get the details in writing if the contract between you will:- Involve the sale of goods worth $500+
- Involve the sale of goods worth $500+
- Last longer than a year
- Transfer ownership of copyrights or real estate
But even if you don’t meet these requirements, it’s a good idea to get the details down on the page to avoid confusion (and potential lawsuits!) in the future.
Get an NDA.
A non-disclosure agreement (or NDA) is a contract between you and another party that details confidential material that you want to share but wish to restrict access to by a third party. In less technical terms: it’s a document that means the other person is required to keep your business idea and the proprietary information related to it a secret. This is especially important if your idea is unique, but even if it’s not, you want to make sure that all the work (such as contacts, vendors, and product details) can’t be stolen.
It’s likely you have health insurance and life insurance to protect yourself and your family – but don’t forget to protect your business, too. In fact, for many types of businesses, you are required to have public liability, product liability, and employer’s insurance. Not sure what kinds you need? Take the time to talk to a lawyer.
Set clear expectations for your employee.
You know that employee handbook you get when you’re hired for a new job but probably never bothered to read? Well, now it’s your turn to write one – and try to ensure that your employees pay attention to it. This will help protect you from lawsuits if someone quits or is fired. You need to spell out the kind of behavior you expect, including your policies on sexual harassment, discrimination, or other illegal activity.
Register, copyright, and/or patent.
Even with an NDA, there’s a chance someone could try to steal your idea, or that someone has a similar idea and will get to market with it first. What you can do to protect your business depends on the stage of the process you are in or what type of product or services you will be selling:
- Copyright protects creative work that is “tangibly expressed,” such as books, blogs, artwork, and music. This is the easiest type of protection because it’s automatic. That means you don’t have to do anything to get it, but you can include the copyright symbol (©) to deter thieves if you want.
- A patent protects “new, useful, and non-obvious” inventions. The process of getting a patent is long, complicated, usually expensive, and it only lasts for 20 years. If you want to pursue this route, you’ll need to talk to a lawyer.
- Trademarks protect brands (think Coca-Cola or Fisher-Price). First, you’ll need to check to make sure the name isn’t already being used by someone else through the Trademark Electronic Search System (TESS). Then you can register it yourself and use the symbol when you write the brand name.
But remember, if someone violates your copyright, patent, or trademark, that still means you’ll have to go through the trouble of fighting it out in court, which means hiring a lawyer and can take a lot of time and energy away from your business.
About Author: Brett Gold covers Hays Firm. He has worked in the legal industry for over 10 years. In his free time he enjoys catching up on the Game of Thrones book series.