How to Legally Protect Your Business Idea

Reviewed by Carina Jenkins, J.D.

If you search for information about how to protect a business idea, you'll find many entrepreneurs telling you not to worry. It's rarely the idea that's genius, they say, but rather the execution of it. Turning an idea into a million-dollar business is hard work, and no one's interested until it's proven to be a successful idea.

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However, stories to the contrary abound — like the one about the Winklevoss twins suing Mark Zuckerberg in the back-and-forth about who really came up with the idea for FaceBook, or Ray Kroc starting McDonald's based on someone else's idea.

If you have a world-changing idea, you probably want to be sure no one else develops it before you get a chance. After all, if the product is exclusive, there's enhanced market value, better export opportunities, and a greater chance you'll be able to turn your idea into a profit. Here's what you should know about keeping that idea of yours safe. 

The short answer is no. An idea is an intangible thing that has no legal protection. 

Trademark, copyright and patent laws are all designed to protect a person's intellectual property (IP), but only once it's been developed into a tangible concept. The three types of laws all protect different types of IP.

• Copyright: Protects creative works such as novels, songs and movies
• Trademark: Protects the logos, designs and slogans associated with a business
• Patent: Protects technical inventions such as new designs, machines or processes

But in each case, the idea has to be given form before it's protected. For example, a person who has an idea for a great mystery movie isn't protected by copyright law until there's some written form of the story, such as a summary or character descriptions. Once these exist, there is some copyright protection. 

How Can I Protect My Business Idea Before I Launch?

Thankfully, there are steps you can take to help ensure your idea stays in your control. 

Legal Agreements

Although IP laws don't protect ideas, you can ask people to sign contracts to ensure they keep your information confidential. 

• Nondisclosure agreement: A contract that states parties won't disclose confidential information
• Noncompete agreement: A contract where an employee or contractor agrees not to compete with the employer after their employment is over
• Non-solicitation agreement: A contract that states an employee won't solicit customers or clients for their own benefit or the benefit of a competitor after their employment is over
• Work for hire: A contract between an employer and an independent contractor that states any work performed remains the property of the employer

These contracts can help you protect your idea and give you legal recourse if someone uses it without your permission. 

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Protection From Trade Secrets Laws

Trade secrets laws protect processes or practices that give you an advantage over your competitors. Examples include the Colonel's 11 secret herbs and spices at KFC, Coca-Cola’s unique flavor or Google's search algorithm. 

The definition of a trade secret is very broad, and in some cases, it can be easier to establish a trade secret than a patent or copyright. The Defend Trades Secret Act lets you pursue a civil course of action if any trade secrets have been stolen. It can also protect trade dress, which is the distinctive physical appearance of a product. 

Select Your Communication Wisely

While still developing the idea, you should be careful about who you share it with. But remember, other people don't have the passion for the idea that you do and are unlikely to pursue it with the same vigor. If you stay too quiet, you have no one to bounce ideas off of and won't be able to ascertain if there's a market for the idea. 

It may seem counterintuitive, but sharing your idea can actually help protect it. Once you have the kinks worked out and are developing a product, talk about it on podcasts, blogs and anywhere else people will listen. This helps you establish that you're the legitimate creator. If someone else releases a similar product, there will be people ready to say, "Oh, that's already been done."

Monitor for Infringement

Once your business is out of the idea stage and into a tangible product, it's up to you to make sure no one steals it. Although you can register copyrights, trademarks and patents, no one in the government is going to keep a lookout for you. Keep an eye on happenings in your industry and watch your competitors. If you notice they're infringing on your rights, take action right away. Taking steps to protect your idea is the best way to ensure it's not used by others.