Jeffrey Kass is a shareholder in the Denver and St. Louis offices of Polsinelli Shughart in the firm's Intellectual Property and Business Litigation practice groups. This article is the second in a five-part series of important legal questions for small business owners and entrepreneurs. The article appeared in Startup Denver.
I have a close friend who always is coming up with amazing ideas. Unfortunately, she has no money of her own to pursue them, but she dreams of being able to share at least one of them with a company that can implement the idea and pay her millions.
But how does someone share a great idea without that other person taking the idea as his or her own? And what should a company do when approached by someone wanting to share an idea?
One of the best forms of protecting an idea is to obtain a patent, but only some ideas are patentable. A patent gives the owner a legal monopoly on the idea. One key indicator of whether an idea is patentable is if it really is a new idea and not just the same as or a slight modification of an existing idea. Even if patentable, the patent process can take years, and a simple patent application can cost between $5,000 and $10,000 just to get on file. Of course, if a patent is obtained, and the idea truly is a good one, others will need the patent owner’s permission to implement the idea. Approaching a company with a patent can be a powerful tool and a great source of revenue in licensing or royalty fees. Conversely, a company licensing a patented idea may have the upper hand against the competition.