November 26, 2012
Most entrepreneurs learn to use non-disclosure agreements (NDAs) to protect their business ideas and technologies while conducting business development activities. Just how effective are NDAs, though? More specifically, how much does it cost to reinforce an NDA?
In a current case being handled by Gilbert’s LLP, an entrepreneur will have to spend over $100,000 to reinforce an NDA against his or her former business partner, not including all of the expenses on the way to the trial.
This is why during last Wednesday’s Entrepreneurship 101 lecture, experienced intellectual property (IP) lawyers Ashlee Froese, Matthew Powell and Nathaniel Lipkus from Gilbert’s LLP recommended that entrepreneurs consider IP protection early on.
Inexpensive IP tricks for early-stage startups
You may think that IP protection is too expensive for an early-stage startup. But according to Ashlee, Matthew and Nathaniel, you can use some tricks to defer fees while still receiving protection. For example, you can use the Patent Co-operation Treaty, an international patent law treaty, to defer the patent filing in over 140 countries for up to 30 months. This should give you enough time to see if you can get an investor or licensee in countries such as China interested in your idea, helping you gauge whether it’s worth your money to pursue a patent there.
IP could be a revenue generator
IP is a valuable asset that you can sell for money. For example, each Nortel patent is worth $735,000, on average, and each Motorola patent is worth approximately $750,000. Coca-Cola’s brand name is estimated to be worth $77.8 million dollars.
Consider this: If Apple never sold an iPad, they would still probably make more money than Samsung, HTC or Microsoft because of the fees they are getting from their patents.
IP can help open the market where your business cannot
When Gilead tried to market their drugs in developing countries, they could only reach 1,000 patients due to the lack of distribution channels in these countries. However, they changed their strategy to license their IP to people who could sell their drugs and there are now 2.9 million people in developing countries using Gilead products.
Want to learn more about IP? Watch the video below.
Entrepreneur’s Toolkit resources that might be useful:
Want to connect?
Forgot to take notes? Here is a sketch note shared by attendee Sacha Chua.