In our previous two posts, we discussed your company’s ability to keep an ex-cofounder from walking away with the company’s business idea. We covered some preventive measures you can take, but ultimately we also concluded that the startup world is messy. Companies are constantly failing and pivoting and restarting and morphing into something totally different. It’s not always easy to track which parts of which ideas belong to which people.
So what if you walk away from a startup, and you want to start a new company using an idea you previously shared with your former cofounders? Is that okay? Or do you risk a lawsuit from your former company?
As we discussed in Part II, it all depends on whether the idea is protectable and — crucially — whether it’s entirely yours.
Here are some steps you can take to make sure everyone is on the same page regarding whose ideas belong to whom:
As a co-founder, you probably throw ideas out to your team all the time. “We should do X!” or “Let’s try Y!” But if you’re pitching an idea to the company, use language like, “I have this idea, is this something the company would be interested in?”
- Document conversations.
Send emails and texts about your ideas. If there’s an intellectual property dispute later, you want to be able to point to a paper trail documenting who came up with the idea at issue. You can use that careful language in this written correspondence, even if you’ve been a bit less precise in your casual conversations.
- Be up-front about your plans.
Ultimately your best bet to avoid a dispute in the future is good relationship management. If you’re really attached to an idea that your co-founders are not as keen on, be clear that you may want to run with it in the future, even if that means starting another company.
- Be clear about which IP you’re assigning to the company.
If you have a formal employment agreement with your startup, there’s a good chance you’ve signed something “assigning” any intellectual property developed for the company over to the company. If you already have another business idea that’s in the same general realm or industry as the startup, it would be wise to consult an attorney before signing it. And make sure it’s an attorney that represents you, not the company. (Don’t go to a lawyer on the board of directors or the startup’s outside general counsel.)
- Be on the same page before you act – and get it in writing.
Hopefully if you’ve been clear about your plans all along — or even if you haven’t — having a candid conversation with your cofounders before leaving to start a company in a competing or adjacent space will prevent misunderstandings. Ideally you and your startup will sign a legal agreement that clarifies who owns what before you actually get started on your new venture. Regardless of how things have been handled up to this point, this written agreement is your best protection if your wanting to start a new and potentially competing venture.
Thanks for reading our series on How to Protect Your Ideas As a Startup Founder! Please note that this is general information not legal advice. If you have questions about your specific circumstances, feel free to reach out for a consultation!
