McStartup

This next question is from Matt, who deftly manages to pack three questions into a single message to me, but since he was so kind as to give me some kudos up front, I couldn't resist posting it up here. :)  I will address the first question in this post, others to follow.   This question concerns intellectual property, and what a software startup should do to protect it. 

Matt writes:

Dude, I am totally loving this blog. As a first time entrepreneur facing a steep learning curve, your blog is the perfect resource. Thank you so much for choosing to help us newbies. I hope to be able to do the same one day myself!

So here's my deal...

I am not an engineer (I'm a journalist), but I want to start a search-within-video software company and I am worried that I will get my idea stolen by one of the potential software engineers I interview and/or recruit along the way. Any suggestions as to how I might mitigate this risk? Or is it just part of the territory.

Thanks!
-Matt

(editors note:  two additional questions held back to be answered later)

Discussing intellectual property protection (IP) is worthy of multiple posts on it's own, but allow me to be blunt:  don't worry about it. 

Here are the steps you should take as a software related start-up.  First, have a standard non-disclosure agreement (NDA) and have people sign it when possible *if* you are going to discuss secret details with them.  It is not necessary (or worth the hassle) to try and get everyone and their brother to sign one just because you are going to give them a little insight into your business.  Be aware that potential investors, particularly professionals (like VCs) will seldom sign them, because they'd be under so many NDAs that they could never possibly keep track if they did.

However, keep in mind that an NDA, while a legal agreement, is going to be nearly impossible to enforce.  If someone you talked to, 3 years down the road, comes up with a competing company, how are you going to prove that they stole your intellectual property?  Very challenging, unless you have an engineer that actually stole code or something like that.  Nevertheless, the NDA at least tells the person "Hey, this is secret stuff, and if you tell anyone, I'm going to send my big bad legal team (if I had one) after you!"

Second, with any employees or contractors (particularly the engineers) your are going to want them to sign what's called an invention assignment agreement.  This agreement states that anything they come up with while working for you is the property of the company.  This prevents them from later moving to a competitor and taking their code with them (at least, theoretically and legally). 

Third, you will want to talk to an intellectual property attorney and look into what other kinds of protection you can have for your software.  Filing copyrights is easy, filing patents not-so-much.  Patents will likely cost you well in excess of $10,000 and take years (I was granted my most recent software patent 3 years after I'd already sold the company that filed for the patent.).  A less costly approach is to file what's called a provisional patent, which gives you an additional 12 months (if memory serves me correctly) to file a full patent, and have your invention date backdated to the date you filed the provisional.  That would probably cost a few thousand dollars instead of tens-of-thousands.

Now, all that said, here's the real scoop:  your intellectual property is mostly worthless anyway.

What do I mean?  I mean that your business is going to be 5% IP and 95% execution.  If someone steals your idea, so what?  Let's be honest, if your technology is so simple that someone can hear a few things and copy it, then your technology provided you with no barrier of protection anyway, and all you have is good, old-fashioned, execution on your side.  If your technology is real complicated, then it's not like a casual conversation is going to lead to grand-theft anyway.

So in short, don't worry about it.  I've seen way too many startups hide in the corner with their bright ideas like they were Smegal from Lord of the RIngs shouting "My precious!"  Take the steps I've outlined above (investors will expect NDAs and Invention Assignment agreements in place), talk to a patent attorney (they'll have an introductory meeting with you at no charge), and move on.  You've got a ton of work ahead of you, and you don't need to be worrying about someone stealing your idea. 

To worry about it is like trying to run a race while not being seen.  You'll move slow, you'll look ridiculous, and you'll never win.

Here are a few additional resources on the subject:

LegalZoom:  Intellectual Property | Copyright | Patent | Trademark

I'll hit some of these other questions in a future post.  Good luck!