How to pitch your ideas without someone stealing them
“What if someone steals my idea?” is a very common question asked by Startup founders. Considering what it takes to bring that idea to life, having it stolen is an understandable fear to have. However, the probability that someone will steal your idea is almost always overblown.
We know that it’s incredibly hard to develop high-technology products, especially in biotech, without getting outside support from investors, R&D partners and others. Sadly, many startup founders decide this is not worth the risk and wait too long to speak to people.
This isn’t always the right move. Sharing information with a third party can seem inherently risky, but there are several steps that startups can take to reduce the risk of theft when sharing intellectual property (IP) with a partner. In this article, we’ve given you some strategies that can help you to share your ideas with confidence.
Step 1: Have a plan
Weigh up your options for intellectual property protection
The first things to think about are your options for protecting your IP. There are various ways to protect your IP, each bringing varying levels of procedure and security (see image below). In the biotech sector, securing patents - often the strongest form of IP protection - is paramount.
Patents are obtained by registering an application with an appointed government body and may take 2-3 years to be granted. Though the patent review process is quite lengthy, protection of the invention starts on the filing date of the application.
At this point, it should go without saying that you should seek advice from an IP lawyer.
But, what if it’s too early to file a patent application? In the earliest stages, your only form of protection is to keep what you have as know-how or a trade secret. Even at that stage, it can be worth having a patentability analysis completed to know what you can share without jeopardising a future patent application.
Patents are typically the best form of IP protection for healthcare products, but the barriers are high. In the early days, you may need to rely on other forms of IP protection.
Document your innovations
Confidentiality agreements can still be exploited, especially in cases where there is no patent. If a partner intends a malicious act, even with an agreement in place, it might still be difficult to prove ownership of the invention in a court of law. Therefore, prior to any conversations, it is important to have all work well documented, electronically if possible.
Have an IP management strategy
An IP management strategy should be considered early on as the company is being established. The key is to make sure that everyone knows what can and cannot be shared with external parties.
Step 2: Sharing your Ideas
Choose partners wisely
As we’ve described in a previous article, it is imperative to carry out due diligence to understand who your prospective partner is, the reasons they want to partner and whether your goals for partnership are aligned. Due diligence may also reveal the partner’s previous collaboration efforts, whether they have a history of blocking patents or if they are involved in any high-stakes IP litigation.
The good news is that, for any partner that relies on bringing in external ideas, such as large pharmaceutical companies and top-tier investors, their reputation is crucial for them. It’s certainly not in their best interests to steal other companies’ ideas. By choosing a reputable partner, you can expect the risk of them stealing your idea to be lowered.
Another strategy is to work with a third party that can connect you with reputable companies. For example, at Probacure, we have a network of reputable companies with which you can be confident about sharing your ideas.
It is highly recommended that a Confidential Disclosure Agreement (CDA) or Non-Disclosure Agreement (NDA) be put in place prior to all confidential conversations to protect the IP. Although these agreements are no substitute for a patent, they can allow both parties to discuss an idea more freely.
Share non-confidential information without a CDA
This brings us to a sometimes contentious issue. CDAs/NDAs are often perceived as slowing things down and therefore are a deterrent to conversations. There are many VCs and large companies that won’t sign these agreements for a first meeting, preferring to wait until they’re sure it’s worth taking discussions further.
Naturally, this creates some friction. Startups want to make sure their ideas are protected. Insisting on a CDA/NDA upfront is always an option, but it could also mean that some people just won’t talk to you.
Think about it from the other side. Investors and pharma companies see hundreds of different opportunities each year and typically have a lot of innovative work going on within their own portfolios and pipelines. They’re generally not in the business of stealing ideas, and they certainly don’t want to expose themselves to the risk of someone claiming that they stole an idea that was protected under NDA.
So, what’s the solution? Think back to your IP management strategy and share enough non-confidential information that would allow your prospective partner or investor to assess your idea. If you’re unable to present granular detail (e.g. about a drug’s mechanism of action chemical structure), there is usually a higher level of information that you can share safely.
We recommend that everyone keeps a non-confidential pitch deck and a non-confidential one-page summary ready to share with partners. If in doubt, run it by your legal advisor before sharing it more widely.
Startups must balance being informative with not needlessly disclosing confidential information. The example of describing a drug’s mechanism of action illustrates the options that you might have in this situation.
You can add disclosures (e.g. “Confidential - Do Not Share”) to any documents that you share, though we would recommend that you seek legal advice on the defensibility of this approach.
Another approach is to use technology designed to prevent your sensitive information from falling into the wrong hands. Good examples are secure data rooms and secure emails, which restrict access to people who you have granted with secure passwords and logins. While this provides you with an added level of security, if the reader is prevented from downloading or sharing it, it can also be a source of friction. In a pharma/biotech company, partnership opportunities are often shared for review with colleagues. It’s also said to be common practice for investors to share opportunities with their network, some of whom could become investors in your startup.
Step 3: Plan for the future
By following the advice above, you should have drastically reduced the risk of anyone stealing your idea. However, the need to think about your IP is not over. What to do as you’re entering into a partnership deserves its own blog article (or several). Below we’ve highlighted a few more things to think about.
Documenting all interactions where confidential information is shared is highly recommended. Whether you do this manually or automatically using technology, you should always make sure there is a paper trail showing what was shared, when and with whom.
Doing this before you start a partnership and once you begin can actually be of benefit to both parties, as it reduces the chances of a dispute in future.
Watch for the details
This is another subject to run by an IP lawyer. In a collaboration, you might have to cede some control over your IP. For platform companies, you may also want to consider how a partnership with one company can restrict how you continue to use your IP internally or in a future partnership with another company.
In addition, a key consideration for international partnerships is whether there is sufficient enforcement of violations of IP rights, as these may vary depending on countries.
With all partnerships, establishing a mutually beneficial exit of any IP sharing arrangement is critical. Key questions include: How will the original IP be returned?, How will the partner demonstrate that all IP has been returned?, and How will the new IP that has been developed be shared?
Due to rapid innovation and the high risk associated with the commercialisation of healthcare products, we now live in a culture that has realised the value of sharing IP. Collaborations can be lucrative and can create more IP for the partners. Following effective IP protection strategies can allow you to explore these opportunities without worrying about having your ideas stolen.
Communicating your ideas can pose some risks, but this should not stop you from speaking to investors and partners. You can greatly minimise these risks with a thoughtful plan for protecting, sharing and exploiting your IP. Following these strategies can allow you to confidently explore opportunities without worrying about having your ideas stolen.
This article was written by Jessie Bwanali and Eyram Adjogatse. For more information on how to find and connect with the best partners, contact the Probacure team or sign up for our newsletter.