Trio researching business startup...how to protect our disclosures from each other?

Three of us are looking at the potential of starting up a business. We know the industry. We are starting with a blank sheet of paper to see if we can come up with a product/service for that industry that could become a viable business. So at this stage it's just research and idea generation.

My question: how can we protect ourselves from each other??? For example, how can we stop one of us doing a solo run with another's idea? Or, one of us keeping an idea to themselves and not revealing it? Is there some sort of template document that we can sign for our own protection (sort of like an NDA but a little bit different)? Thanks

Re: Trio researching business startup...how to protect our disclosures from each othe

It's called trust; if you don't have this with your two current colleagues all the NDA / contracts in the world won't fix that, so I'd respectfully suggest you find others to work with.

A contract is not useful to control peoples' behaviour, it's purpose is to set the rules so everyone has a common understanding (not everyone agrees with my philosophy, but that doesn't invalidate my philosophy).

Re: Trio researching business startup...how to protect our disclosures from each othe

Thanks mathepac...I do trust them. However, everything I've read about starting a business has emphasised protection of IP, so I just want to do the 'right' thing to protect us all.

Re: Trio researching business startup...how to protect our disclosures from each othe

Squonk said:

Thanks mathepac...I do trust them. However, everything I've read about starting a business has emphasised protection of IP, so I just want to do the 'right' thing to protect us all.

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Ideas are not IP.
IP is something you can patent, 99% of business are based on hard work, marketing, branding rather than IP.

Re: Trio researching business startup...how to protect our disclosures from each othe

Ok, I hear the feedback. But how about this scenario...person A comes up with a novel idea but doesn't want to go ahead with the business and pursues another opportunity elsewhere. Persons B & C decide to patent the idea. Later the business is sold based, in part, to the inital idea from A. Does A have rights to claim some of the money made?? This might seem like an extreme scenario, so I'm asking the question to protect all parties involved from the outset.

Re: Trio researching business startup...how to protect our disclosures from each othe

Squonk said:

... I hear the feedback. But ....

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I'll translate what these five words mean in practice - "I haven't heard a word you said. All I know for sure is you haven't said what I wanted to hear so I'll keep talking until you eventually get worn down and confirm for me the absolute correctness of my thinking."

Re: Trio researching business startup...how to protect our disclosures from each othe

Mathepac, I understand exactly what you are saying and you raise some valid points. But you seem as rigid in your thinking as you claim I am. I just can't get my head around the idea of generating ideas to start a business without a fear that one of the parties may claim ownership at some later stage or somehow 'complicate' matters. If you or anyone else can tell me that there is no legal precedance for this then that's fine by me.

I am in the situation where I and some others could be investing several tens of thousands of euros so I want to get this off to a sound footing as possible. (I know I will get feedback now about getting some legal advice, and that indeed may be the next step.)

Re: Trio researching business startup...how to protect our disclosures from each othe

If you are that concerned about IP (including patents and trade secrets) at this stage, you should go to a commercial solicitor to draft up an NDA for the three of you. It will need to be pretty specific in your circumstances, but is easily done. A web-NDA would not be appropriate if you really do want to legally protect yourselves. If you are potentially investing 10s of thousands of euro, then spend €500 to get a custom-made NDA & ownership agreement. You also need someone to explain the patenting process to you so you can answer that question above yourself (in the absence of an ownership agreement to the contrary, or an assumption of trade secret protection, the first to file rule could apply).

The NDA/Agreement should deal with the situation you describe above and also should deal with non-patentable ideas (if capable of trade secret protection), "normal" ideas (including exceptions if it turns out that those ideas are already in the public domain), confidential information, ideas unrelated (or not directly related) to the original reason for getting together, copyright, who gets to protect the idea (e.g. if one or two people leave the "group"), if royalties are paid to someone who comes up with the idea but doesn't want to continue with the business, if royalties get paid to someone who puts in money at the outset but doesn't continue, if there is a timeline on how long the idea/work will be protected by the group before one/all of them can run with it themselves, is there a timeline on when the remaining members of the group must file for patent protection or commercialise the idea, if anyone can disclose/sell/license the idea/work to another party without the others' permission and on and on and on. Those are just some of the things that occur to me at midnight of a Wednesday. So you see the potential complications.

You seem to be taking this seriously - get a solicitor.

Re: Trio researching business startup...how to protect our disclosures from each othe

mathepac said:

A contract is not useful to control peoples' behaviour, it's purpose is to set the rules so everyone has a common understanding (not everyone agrees with my philosophy, but that doesn't invalidate my philosophy).

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This is very good advice indeed. I get annoyed when I hear solicitors arguing against pre-nuptial agreements saying that they are invalid under Irish law. However, they ignore the fact that the pre-nup clarifies for the parties themselves what they are agreeing to.

Squonk

You need a good business advisor - possibly a solicitor or an accountant, but more likely someone business minded who understands how businesses work.

Why have you got two partners at all?
Why these two people in particular?

Is it your idea? As pointed out, you can't patent an idea. But is there some aspect of it you can patent? If so, do it now in your name.

If you are in a strong bargaining position, insist that neither of them can set up in a similar business within two years of leaving the partnership.

Robbing of ideas is not as common as people think. As Pat says, an idea is only a small contributor to the business success. Most people don't have the initiative or courage to act on their business ideas. Many of those who do act, do not have the other skills required to make it a success.

Brendan

Re: Trio researching business startup...how to protect our disclosures from each othe

Thank you Watersprite and Brendan for your concrete advice. To your questions Brendan : why have I these two partners? We work as a trio in an R&D environment right now (for past 8 years) and we complement each others strengths and weaknesses fairly well.

Right now, we have no specific 'idea'.....we just know a section of a particular industry we think we can add value to. That's why I am seeking advice at this stage before any potentially patentable ideas get generated between us. (as a sidenote, the three of us have about 20 patents between us so we do know the ins-and-outs of IP generation to some extent).

I will discuss with the other two about getting a solicitor involved at this stage. Thanks.