How to stop your ideas being stolen by your supply chain

By: Guest contributor

Date: 28 October 2014

How to stop your ideas being stolen by your supply chainIf you've worked hard to build up a brand or come up with a new product or process, you have intellectual property (IP). You probably know that your IP is at risk; others may try to copy your idea or pass off their products under your brand. This is known as infringement and can cause financial and reputational harm.

What you might not know is that members of your supply network can be one of the most common IP infringers. That's right, incredible though it may seem, people you trust to make or sell your products can be among the most likely to steal your ideas.

Upon further examination, this makes more sense. When you instruct a supplier to manufacture your product, for example, you share secrets with them. They then not only have the required information, but also the means to roll it out quickly.

Meanwhile, the retailers you supply often have their own manufacturers and if a product succeeds, they could create an “own-label” version, enabling them to dramatically increase their margins – by cutting you out. Think this would never happen? Think again.

If you're a small business or start-up, you're at risk of being caught in a David v Goliath battle with bigger organisations, which is certainly not where you want to be.

This isn't just limited to start-ups that sell physical products either. If you've commissioned a programmer to create some software for you, what's to stop them designing a similar product and selling it to one of your competitors? Thankfully, you can protect yourself, but what steps should you take?

Lay the groundwork

There are a number of essential steps that any business ought to take when instructing third parties to create and sell its products, chief among them having agreements in place. Non-disclosure agreements should be signed before any information is disclosed and relationships with all suppliers, distributers and consultants should be governed by agreements that clearly define your IP and confirm your ownership.

Make sure that where you can, you register your IP – especially trademarks, patents and product designs. This isn't enough to prevent IP theft on its own, but it'll come in handy should an infringement occur.

Limit access

There's a good rule of thumb here – don't tell anyone anything they don't need to know.

Take legal action if necessary

If the worst happens and your IP is infringed, it's up to you to enforce it. Many businesses believe that having a registered right is enough to stop IP theft, but it actually falls to you to instruct lawyers (and pay their fees, of course).

The legal costs to take a case to court can easily be £100,000, which is why IP insurance exists. If your IP is infringed and you've taken out a policy, the IP insurer will fund the case.

By going into business, you necessarily incur the risk of IP theft. However, taking a few relatively painless steps can provide a good degree of protection.

Copyright © 2014 David Bloom. David Bloom is an IP lawyer and founder of IP insurance broker Safeguard iP.

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