Legal considerations when proposing business idea to employer

Question

Ok, so you've got an idea for a potentially successful online start-up. You know that you'll never set the thing up yourself, you prefer the stability of your permanent job. Then you think, "Hey maybe my boss would be interested in backing this as an internal project. Obviously I'd want X% of the profits for coming up with the concept in the first place and I want to be able to retire when we get bought by BigCorp."

1. Can you follow any legal procedures to prevent anybody you tell about a business idea from exploiting it independently?

2. What kind of deal should you be looking at (e.g. profit share, shares etc)?

Thanks!

Answer 1

To answer your first question: no. There's nothing you can do that will stop someone from exploiting an idea you have. Apart from patenting it. (Which you aren't really supoposed to be able to do unless you've already at least partly implemented it in the first place).

My advice would be: if you know someone you trust not to steal your idea, tell them. If not, don't.

Also, if you have an idea and you tell your boss, you're not really entitled to anything in terms of ownership of X% of profits. That's just supposed to be part of your job.

Sorry: this probably seems like a negative answer, but I'm trying to be realistic.

Ben

Answer 2

IANAL, but I've been around the block a few times.

First, find a competent attorney that specializes in startups and get some professional advice and follow it. Preventive lawyering is really a whole lot cheaper than waiting until it is too late.

Second, protect yourself and make sure you do everything in writing. If your employer doesn't bite and you decide to do it yourself then you'll be protected when you're successful and your company comes back later and tries to claim ownership over the idea. I've seen this happen more than once.

Third, try to get the people you pitch to to sign a non-disclosure. If they have half a brain they won't sign one, but it's an important sign of your intent. Without an NDA do your best to not pitch your idea to anyone who can take the idea and run with it based on your elevator pitch. That generally means really competent technical people, or an expert in the business area.

If you get to the point of having to worry about a deal go back to that competent attorney you retained.