Author: Donna Chesteen, Esq.
One of the most frequent questions I get asked is how a client can protect the ideas in the new mobile app she is creating. The three most common ways of protecting IP are patents, copyrights, and trademarks. Unfortunately, none of these are effective in protecting a developer’s idea. A patent protects an idea but it is highly unlikely that the idea underlying a mobile app—no matter how clever—rises to the level of novelty required for patent protection. So, what about copyrights? Well, a copyright only protects the expression of the idea—not the idea itself. That means a copyright can protect your source code and maybe even the look and feel of your app but not the concept of the app itself. Finally, there are trademarks. Trademarks, however, only protect your brand—not your idea. Is there anything you can do? Kind of. You can protect your ideas before the mobile app is launched using the oft forgotten concept of trade secrets.
According to Florida law, a trade secret is “information, including a formula, pattern, compilation, program, device, method, technique, or process that: (a) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (b) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” As long as you make reasonable efforts to keep your idea secret, it is protected under the law.
What constitutes “reasonable” efforts to keep your idea a secret? At the very least, you should have a non-disclosure agreement (an “NDA”) in place. Before you reveal the idea to anyone, have him sign the NDA. This includes your development staff, your marketing team, and your service providers. In addition, you should have confidentiality and non-compete clauses in your agreements with any employee, contractor, or service provider. NDAs and confidentiality agreements require that you tell the other person that the information you are providing is considered confidential (even better, put it in writing). You cannot just assume the other person will realize the confidentiality of the shared information. You must be consistent and diligent with regard to whom you disclose your secrets and the methods in which you reveal them.
You should also employ reasonable security measures to ensure your data is protected from external intrusion such as hacking and other kinds of data theft. Policies should be in place within your organization and you must periodically monitor behavior to make sure these policies are strictly adhered to. If you don’t take these reasonable steps to prevent trade secret misappropriation and data theft, a court is unlikely to rule in your favor should you file suit against someone for stealing your idea.
Many people within the startup community say you should share your ideas freely. They believe this free sharing leads to more robust implementation and later success. While this may be true, be aware that this sharing will take away any control you have over your idea and any protection you have under trade secret law.
In addition, many investors won’t sign NDAs. Usually, however, investment opportunities do not arise until you have already achieved some kind of success in the marketplace and your trade secrets have already been revealed.
Obviously, the protection afforded by trade secret law is short-lived for an app. Once you launch it, everyone has access to the idea and it is no longer protected. However, if you have worked with a marketing team to develop a strategic launch plan, you may have the advantage of quickly gaining a large market share and, hopefully, developing a loyal customer base. In addition, depending on how complex your idea is to implement, you may have several months alone in the market and you can begin making enhancements while your new competitors are still playing catch-up.
If you need help developing a trade secret strategy, contact me. I’ll be glad to assist.