10 Tips on How to Protect a Software Idea

How to protect a software idea? I recently answered a related Quora question on this one. I took parts of this post from a previous post on how to protect an idea while building a business, but this one focuses more on software, specifically. That’s where I’ve spent most of my career, and still my favorite business, by far. So here’s what you do if you have a software idea you want to pursue, while you build it. You worry that it’s easy to duplicate. You want to protect it.

10 serious suggestions:

1. Shut up about it. Share this idea only with people you trust, who need to know. Only partners and potential team members at first, and only if you trust them. No bragging, no opening up to strangers. Be careful with experts too. Your software business will depend on trade secrets, not legal registrations.
2. You need an attorney. Much of what you do or don’t do revolves around legal work, so you need an attorney. You can reduce the expense by reading up on issues before you meet, so you spend less time. I’m not an attorney and this answer is just my business experience, not legal advice.
3. Make sure you own the code. If anybody besides you works on code, then ask your attorney how to make sure you own it. It has to do with work product. Follow your attorney’s advice on this. Don’t leave anything to chance or verbal promises. Read up on what happened between Zuckerberg and the Winklevoss twins.
4. Copyright all the code. Software is hard to patent but easy to copyright. Copyright is for creative works. Copyright is relatively cheap. Know, however, that copyright doesn’t protect you against copying by reverse engineering, but at least protects you against people stealing your actual code because only the code is protected, the actual words; not the idea.
5. Use non-disclosure agreements wisely. It’s okay to ask for signed non-disclosure agreements from potential co-founders and team members, or friends-and-family investors. Don’t depend on these documents, don’t make them a huge issue, but use them as much as you can; and don’t expect serious arms-length investors to sign them. They won’t and shouldn’t.
6. Patents are for inventions, algorithms, and formulas, not ideas. You can’t patent an idea. If your software idea depends on an algorithm that you developed, and hasn’t been used before, then maybe you have a chance to patent that. However, very few software products include algorithms that can be patented. Your best bet for this one is a patent attorney with software experience. Don’t do a ton of work on it, or spend a lot of money, without first checking with patent experts.
7. Trademarks are for commerce. Trademark your logo, your tag lines, your images, your main selling points as quotes. Trademark is relatively cheap too.
8. Register your domain name and entity. Neither protects you a lot, but both are a good idea. Registering the entity protects your business name to some extent, as long as you were the first in the world. It can cost as little as $50. Registering the domain name, if you have a good one, protects you for that domain but not against copycats with similar names.
9. Write your idea down and mail yourself 10 copies via registered mail. This can protect you later, with sloppy problems that come up, showing legal proof of what your idea was on what date. It’s very weak protection, but cheap, and easy to do.
10. Investors come much later. Don’t talk to investors until you’re far along, with a working version you can demonstrate, milestones met, and traction. And beware of fake investors who are actually consultants looking for new clients. Always check the web footprints of investors before you share anything with them. The legitimate investors have web footprints and are easy to identify.

Some hard truths in this area:

1. Copying is legal. With software, it’s legal if they don’t steal the code, but just duplicate the functionality. Since the first time my company’s software products started to make a dent in the market, we were copied. They copied our idea, our concepts, our websites, even our packaging and marketing messages. And all of that was legal (but I’m not an attorney; check with an attorney of course).
2. Products get copied all the time. Try to find an important software product category that has only one entrant. Competitors will crop up if the market is interesting. No competition is sometimes worse, because it means nobody wants what you’re selling. It’s the way of the world
3. Legal protection is usually pretty weak. Even patents, which are the best protection, are copied all the time, or avoided via workarounds. The real value of a patent depends a great deal on how well it was written in the first place, and then, on watching for violations with constant vigilance (but I’m not an attorney; check with an attorney of course).
4. Build barriers to entry and reinforce them constantly. The only real protection is to be faster and better than competitors and keep improving so you are always ahead (but I’m not an attorney; check with an attorney of course). Make your customers love you, make them loyal. Watch for new markets and new applications in contiguous product or market areas. Make your business really hard to compete with.