Columbus, OH asked in Copyright, Intellectual Property and Patents (Intellectual Property) for Ohio

Q: How can I protect my ideas from being stolen while looking for funding and investors with no money for a patent?

I have multiple ideas/inventions and i don't know how to explain my ideas to investors to get funding without having a patent to protect my ideas. But I don't have the funding to pay for a lawyer and everything to get a patent. So what could I do to protect myself and my ideas while talking and finding investors?

3 Lawyer Answers
Peter D. Mlynek
Peter D. Mlynek
Answered
  • Intellectual Property Lawyer
  • Moorestown, NJ

A: This is one of the most frequently asked questions. You can't get funding without patents, and you can't get a patent without money. It is a Catch-22.

Here are some guidelines:

(1) You need to recognize that ideas by themselves are not protectable. If you have an idea for a new product or a service, anyone can take the same idea and make a product or service. What you are getting a patent for is an invention. An invention, that will make your idea a reality.

(2) When pitching to investors your idea for which you do not have a patent or have filed an application for a patent, you are able to talk about the idea, the market, the pilot, the resources, the manufacturing, etc., without disclosing your invention. The good news is investors do not really care about the technical details of your invention; they just care about the cash flow.

(3) The pitches usually go like this: Today, our society is facing this problem. This problem is costing us x billions of dollars per year. There is a huge market demand to address this problem. The good/service that I have come up with is able to successfully solve this problem. Based on our market research, we project _% penetration after 1 yr of launch and _% after 5 yrs. The manufacturing costs will be $_ for _ units, but would be only $_ for _ units. Our manufacturing, distribution, marketing, HR costs will be $_, whereas our marginal revenue will be $_. We project break-even point to be _months after our launch. After 5 yrs, the ROI will be __. Here is the SWOT analysis. Here are the stagegates. Here is a description of our distribution channels. Here is the description of our HR ramp up. Here are the laboratory/pilot/full scale results to prove that our invention works. Not that you would care, but I'll disclose the technical details of the invention to you once a patent application on it is filed.

(4) Investors will be investing in a business that will make them lots of money. They are not really interested in an invention. Not even in an idea.

Good luck!

Erik Špila
Erik Špila
Answered
  • Intellectual Property Lawyer
  • Senec, Slovakia

A: Dear Mrs or Mr,

I would also recommend signing NDA (non-disclosure agreement) everytime you are consulting with investors about your invention. This will give you more safety for your invention for the future.

Every serious investors should accept that and sign such agreement.

I wish you a good luck with your project.

Joshua David Mertzlufft
Joshua David Mertzlufft
Answered
  • Intellectual Property Lawyer
  • Hamburg, NY

A: Hi, this is a tricky situation many founders I’ve worked with have found themselves in. For a startup in the early stages when funding is tight (it usually is at the very start), a provisional patent application could be filed to defer some of the costs and get to “patent pending.” A caution, though, provisional patent applications need adequate disclosure to provide real value. For more information, I recently wrote a blog post on provisional patent applications: https://mertzlufft.law/two-minute-drill-what-a-provisional-patent-application-is-and-isnt/.



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