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Crowdsourcing Your Invention? 3 Legal Tips That Can Pay Off

By Brett Snider, Esq. | Last updated on

Crowdsourcing your invention sounds like a good idea to many entrepreneurs, but there are some worrisome legal tripping points.

In February, the White House announced it would even consider "crowdsourcing" the review of patents, in an attempt to deal with the increasing issue of patent trolls.

So before you decide to let your invention enter the fray, here are three legal tips to consider when crowdsourcing your invention:

1. Know Who Owns What.

Whether you're working in a creative field or on something a bit more technical, the power of collaboration and a creative community cannot be denied. However, a smart entrepreneur will want to make sure that the fruits of this collaboration are at least in large part owned by him or her.

If your invention comes out of a small business incubator or "excubator," make sure that you examine any agreements to see where the patent rights lie. Creating an invention while working your day job isn't unheard of, but your employer may end up getting rights to your invention.

Avoid ambiguity by being clear with your "crowd" -- preferably in legal contract form -- about what, if any, part of the invention ownership is up for grabs. This might include whether a joint patent will be filed for your invention.

2. Control All Information About Your Invention.

You may want some help by crowdsourcing a particular problem with your invention, but you don't want to share your baby with the world just yet.

Don't be afraid to ask your collaborators to sign a non-disclosure agreement (NDA) keeping them from leaking potentially sensitive data before you've been able to protect your invention.

3. Have a Crowdfunding Plan in Place.

Turning to the crowd for ideas and help may be distant concerns compared to your need to fund your business. Crowdfunding platforms like Kickstarter can be useful tools in financing your invention, but only if you have a plan.

Crowdfunding is intensely hands-off, which means you'll be mostly on your own to manage your promises and demands. Websites like Kickstarter or Indiegogo will not bail you out when your invention tanks, and you'll probably have to make good on any promises you made to your backers. Also keep in mind that the SEC is looking very carefully at these sources of funding.

Worried about your crowdsourced invention? Consult an experienced patent attorney today.

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