Business + Marketing

Licensing and Protecting Your Invention Against Competitors Can Get Hairy

November 12, 2018

By Aaron M. Arce Stark

Photo © Ethan Yang Photography

Congratulations—you and your team have developed a small clip-on lighting device that’s perfect for an event photographer’s needs. The next step is getting it out into the marketplace, but you don’t have the resources to manufacture or sell it yourself, so you’re looking to license your design to a company that can help you bring your product to life. How, then, do you protect your idea from being stolen by the very company with which you’ve partnered?

There are several ways to safeguard your ideas and designs—your intellectual property—and the first and most important is a patent. If your product is eligible to receive a patent, it’s worth the money to acquire one, but be aware that not every product can be patented. In order to receive a patent, your invention must be 1. patentable subject matter, 2. new, 3. useful and 4. non-obvious.

In general, almost everything that can be invented is “patentable subject matter,” which is defined as devices, processes or compositions of matter. The only inventions that really fall outside this category are totally abstract processes, such as software ideas that haven’t been reduced to a workable written form. Similarly, it doesn’t take much for a device to be “useful.” Anything that has any sort of use, even a frivolous or purely entertaining use, is considered useful. Much more difficult are requirements 2 and 4: that the device be new and non-obvious. There are thousands upon thousands of patented devices, and for your device to be “new,” it must be different from all of them. And furthermore, the creative leap from all the lighting devices that came before you to your lighting device must be one that was “non-obvious,” meaning not something that anybody would see as an easy and natural progression of the technology.

It’s a long and expensive process, but once you get a patent, you have powerful legal protections for your idea: Nobody can make or sell a product that matches your patent’s description for any reason, anywhere in the United States for the duration of the patent, even if they arrived at the idea completely independently. If they do, you are eligible for hefty payouts. What’s more, a patent will not only protect your product from any companies you license to manufacture that product, it will make companies more likely to want to license your product. Manufacturers are always interested in stable products with a low risk of competition, and nothing makes a product quite as safe from competition as the limited monopoly that a patent grants.

Unfortunately, not every product can be patented—most will fail to meet the “new” and “non-obvious” requirements—but there are other protections that can be just as strong, including a well-maintained brand identity, or trademark. Trademarking your brand and guarding your identity won’t prevent an unscrupulous manufacturer from reproducing your product, but it will prevent others from claiming to be you or producing a product that is confusingly similar to yours.

Another way to protect your idea is to keep it secret. United States law recognizes that when a company puts effort into keeping a process or design secret and derives an economic benefit from that secrecy, because other companies can’t reproduce it and therefore can’t compete, then that secret is a protectable legal asset called a trade secret. Stealing a trade secret, also called misappropriation, can lead to hefty payouts.

Unfortunately, not everything can be covered by trade secret law, including physical devices because they can be disassembled and reverse-engineered. If, however, you are trying to protect a process such as software, or if there is some part of the manufacture of your device that truly can’t be reverse-engineered, then all you have to do to cover it in the cloak of trade secrecy is to actively work to keep it a secret. Having a non-disclosure agreement signed means that your manufacturer won’t be able to tell anyone about the processes you deem secret.

Lastly, there is the non-compete agreement that you can have your manufacturer sign stating that they won’t create a product that competes with yours. There are limits to non-competes—courts will only allow them for a limited time after the termination of a working business arrangement and only within a limited geographic area—but they can be a powerful and flexible way to keep your business partners from stabbing you in the back with competitive products.

Aaron M. Arce Stark is a lawyer for artists and entrepreneurs. Learn more about his law firm, Arce Stark Law LLC, at

This article is for informational purposes only. Contact a lawyer for legal advice.

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