Validating your app idea with real audience is important. Heck, we even actively encouraged you to do so in our previous post.
Yet, the Social Network movie gave us a glimpse of how fatal casual sharing can be. No one wants to end up like the poor Winklevoss twins, who supposedly hired Mark Zuckerberg to develop a social media app for them.
And there are bunch of other “spooky” stories out there warning the newbie entrepreneurs about dodgy competitors and developers, who may run away with your idea the very moment you’ll share it with them.
So should you be worried about your app idea protection before you actually start working on it?
Let’s investigate together.
How Often Startup Ideas Get Stolen?
Ok, so everyone knows the Facebook story. But how often startup ideas actually get stolen?
In retrospect, there are quite a few good examples:
- It’s still unclear whether Apple stole GUI from Xerox or not.
- Some say Alexander Graham Bell bribed the patent officer to receive details of Elisha Gray’s invention – the telephone.
- Both Tesla & Marconi worked on the radio, and the patent was first assigned to Marconi, but then transferred back to Tesla.
The past decade also knows quite a few controversial cases:
Twitter is said to copy their product idea from another company called TechRadium – a mass notification system, which could send notes to subscribers via text, email or voicemail. TechRadium consequently filed a patent infringement lawsuit against Twitter. While Twitter was proved to be innocent, their idea wasn’t quite original in the first place.
Billpoint was a P2P payment system, which originally integrated with popular auctions like eBay. Up until eBay decided to partner with PayPal instead and phased out acceptance of Billpoint. The product later became part of Wells Fargo bank. Being the second most popular market solution can be quite profitable too.
Hulu didn’t pursue a brand new idea either. Before them, there was Joost – a service co-founded by Skype folks with a hefty sum of investment money to burn. They even managed to sign up CBS and Viacom as their early partners. But their product had a massive flaw – users were required to download software first, and then to download the actual show. Hulu then entered the scene and took over by offering instant watching for everyone. RIP Joost.
What You Can Learn From These Stories
Being initially the first certainly does not mean that you will win in the long run. Having a unique app idea is important, but execution is everything.
As Derek Sivers, serial entrepreneur and former founder of CD Baby, brilliantly puts it:
“The most brilliant idea, with no execution, is worth $20. The most brilliant idea takes great execution to be worth $20,000,000”.
He even made this witty chart:
Ramit Sethi, another serial entrepreneur and author of the New York Times bestseller “I Will Teach You To Be Rich” also argues that great ideas are a big fat myth:
“Success almost never comes from a mind-blowing idea, so sitting around trying to find one is a waste of time. Success comes from a basic idea executed amazingly well. Ideas are rarely found by thinking. They’re found by doing”
Bottom line: being paranoid about protecting your app idea before you even start developing it into actual something will likely get you nowhere.
After all, in your head this idea may be worth a gazillion of dollars. While in reality a lot of people may just find it mediocre or plainly stupid.
And that’s exactly why you need to show your idea to the world and get the initial step of approval before going all in. And don’t worry about having your idea stolen just yet.
Why Others Can’t Rip Off Your Idea Completely
Let’s take a look at the common suspects:
- Larger market players will not be bothered by your idea up until it becomes a serious competition to them aka a fully-developed, popular and profitable product.
- VCs and other investors will either like your idea and fund it, or pass on it. They won’t hire a team of copycats to implement the very same solution.
- Entrepreneurs working in other domains already have their hands full and won’t drop everything to enter the race with you.
- Android and iOS developers you’ll hire for the project will be bound by legal documents and contract (will get back to that shortly). They will also put their company’s reputation on the plate. Previously we wrote a detailed guide on how to find and vet a reliable app development company in the first place.
There’s just one very specific group of people, who can actually steal your app idea – entrepreneurs working in a similar field.
Avoid talking with them in the first place and choose not to reveal the essential product details.
Next, raw ideas don’t get stolen. It’s the proof of concept, market & design research documents and the plan of action that carries most value. And of course, you shouldn’t reveal those to any other stranger out there.
Jason L. Baptiste, founder of Morcel and former CEO of Onswipe, mentions that copycats can’t steal from you what really matters. That is:
- Your long-term product vision, which will define your product’s success.
- Your domain expertise.
- Your market failure driven pivots.
- Your plans for generating revenues.
- Your passion & talent to make the project work.
But as your idea gets more and more real during the course of your work and you get more people involved, there are still some precautions worth taking.
How to Protect Your App Idea During The Development Stage
Legal staff is confusing. And professional lawyers charge a hefty price even when you just want to know whether you need to copyright an app idea or not.
So let’s establish some basic clarity here.
- Ideas in pure form can only be protected by patents. But if you can express your idea in a certain form – e.g. as source code – it could be copyrighted.
- If you choose to partner with an overseas company mind the difference in copyright laws.
Here’s how to protect an idea for an app with some basic legal documents:
Draft an NDA (Non-Disclosure Agreement)
An NDA is a contract between two or more parties agreeing not to disclose confidential information shared with each other to any 3rd parties without an explicit permission.
When an NDA is in place, the developers you hire can’t talk about the product to anyone outside the company, for instance.
Another common part of the NDA contract is a non-compete agreement – a clause under which one of the parties (typically the employee/vendor) agrees to not enter or start a similar venture in competition against another party; or not to work in the similar domain or on a similar product. These are the two standard documents we often propose our clients to sign first.
Yet that’s where the problems may start.
First of all, a lot of VCs including Paul Graham and Guy Kawasaki clearly stated that they will discard your pitch if it comes with an NDA and attached. The reasoning is simple – if they choose to sign your NDA, they will be legally bound not to take action on a similar pitch they receive next.
The same is often true with established development companies. Signing up an NCC will automatically reduce the pool of projects they are allowed to accept in the future.
So think carefully what to include in the NDA and NCC and when to use it.
Assign The IP Ownership
Your project scope documentation is copyrighted to you. This should be clearly stated in the app development contract you choose to sign with a company.
The contract you sign should clearly communicate the extent or limitations on the following as well:
- Scope of work
- Modes of delivery
- Payment milestones
- Post-release support.
Additionally you may want to consider copywriting the next expressions of your app idea:
- Source code
- Custom-made visual elements
- Brand name
- Programming snippets.
Despite the high costs, it’s always worth hiring a lawyer to go through the contract and file all the supporting documents if necessary.
To Patent or Not to Patent?
Patenting an app idea is the only way to protect it in pure form.
However as Angelo Firenze mentioned on Medium – this should be the last thing on your agenda. Filing a patent and getting a trademark approval stamp can take almost a year. And patent applications are processed within three years on average.
So will you just sit on your app idea for all that time or actually get to work, release the product and conquer the market first?
To wrap it up – there’s no bulletproof way to protect your app idea from being stolen. You can patch the loopholes and be vigilant about whom you choose to share it with.
But in the end of the day, great execution is worth much more than just a raw product concept without any additional proof. And if you need help with that, along with solid legal guarantees in the contract, Alty team would be happy to help!