It may seem like small businesses will never be able to fairly compete against the huge corporations that dominate most of industry. For example, you’ll never have the same budget for marketing that a company like Nike or McDonalds has. However, there is one way to get ahead, and its a path many small businesses took on their way to becoming the giants of industry. That way is through innovation and the use of patents and NDAs to protect intellectual property.
If a business owner develops a completely new idea for a product that is distinctly different from everything else on the market, he or she can apply for a patent. For a new invention or product to receive a patent, it must be something new, something that is not obvious, and something that could be useful to industry. If the application for a patent for the product is accepted, the patent will be in force for twenty years. The patent is literally a legal agreement that bars other businesses from trying to develop versions of your patented product.
During those twenty years, only you will be able to manufacture and sell the product. However, if you wish, you also have the option of licensing out the rights to make the product to other companies. You also have the option of selling the invention to another company, which is the way many inventors have become very wealthy. If another company tries to ignore the patent and copy your product, you have the right to sue them for compensation.
Patents are certainly a way for small businesses to gain an advantage over much larger competitors. However, after twenty years, those competitors will be able to produce versions of your formally patented product. There is one other way to help protect against competitors completely reproducing your product. It’s through the use of NDAs or non-disclosure agreements.
You can use non-disclosure agreements to protect your intellectual property without having to use a patent. An NDA is an agreement made between two parties, one of which is trying to protect its intellectual property. The agreement will prevent the other party from exposing the details of the intellectual property to the public or to third parties. For example, this is what prevents the employees of Coca-Cola from being able to make the exact recipe for Diet Coke public knowledge.
The good thing about NDAs is they never expire unlike patents. Unfortunately though, non-disclosure agreements are not going to include competitors you don’t work with. So those competitors will legally be able to try to duplicate your product and crack the secrets of your intellectual property. This is what allows other companies to release their own knock-offs onto the market.
It may seem that large corporations always have the edge when it comes to entrepreneurship. However, a small business can actually gain a strong advantage through the use of patents or NDAs to protect trade secrets. There are many advantages that a small company can employ. Contact a small business consultant for more information.
Nick Messe is president of Lead Frog LLC. Joe Abraham is a small business consultant with expertise in all the key areas of small business growth including business startup, business development, traffic generation, sales development, marketing and succession planning.