Using a non-compete and non-circumvention agreement as part of your IP protection strategy

Clients often come to me with the same scenario: they have a great idea for a new product or service, but to get the business plan together, they need to speak with vendors, customers, investors and others who may be involved in the business operations in some way. Then they ask the inevitable question: How do they protect their business idea from being used by others after they reveal it to them?

Concepts are difficult to legally protect. The law does not allow us to own an idea per se. We can own the way of expressing an idea under copyright law, or a particular way of carrying out the idea under patent law, but the concept itself it not something we can “own” and have a monopoly over. The role of the attorney is to find a way around this factor so that the worst-case scenario (someone takes your idea and runs with it) can be avoided, or in the case that it does happen, remedies are built in to compensate you for your loss.

Although not perfect protection, binding promises between parties can limit the ability to do things that would otherwise be legal to do. A confidentiality agreement or non-compete agreement prohibits one or both parties from sharing certain information with third parties. In this case, you may not “own” the idea, but you can limit who is allowed to talk about it and to whom.

Another type of agreement is a non-circumvention agreement where the parties promise one another that each will not try to go around the other party by doing business with people or companies that were introduced to them by virtue of the business relationship. In short, you can’t cut out the middleman without consequences. This is a powerful tool for protecting your proprietary business model and proprietary contact network. Combining these promises with a confidentiality agreement ensures that you are taking the necessary steps to protect this information as a valuable trade secret. By doing so, you can bring action against someone who misappropriates your proprietary information and uses it for their own benefit. A sample agreement you could use appears here.