Can I stop my former startup co-founder from stealing my idea?
October 21, 2013 6:14 PM   Subscribe

So I had this idea for a tech startup. I found somebody that I thought could help me make it real. We developed a pitch for investors. Then he decided he didn't like the equity arrangement we'd verbally agreed to, and informed me that he intended to move forward with my idea without me. Can I keep him from doing so?

We had no contracts or written agreements of any kind. We never incorporated or created any kind of formal business entity. All that exists are the investment pitch materials and notes from that process, none of which are copyrighted or patented, but many of which I think I can prove were written by me. I know, I know, YANAL or YANML, but here's my first question: Do I have any (U.S./California) legal recourse to stop him from moving forward?

Also, I still want to build my startup. My former partner wants us both to sign a legal document saying that neither of us will sue the other one over all of this. Obviously this would protect me from him coming after me in the future, but my second question is: Do I need that protection, if I can prove that I wrote the materials that contain the key ideas?
posted by anonymous to Law & Government (12 answers total)
You really need to speak with an attorney about this kind of stuff. No one here can reliably answer the question about what legal recourse you have.
posted by dfriedman at 6:17 PM on October 21, 2013 [1 favorite]

Of course he wants you to sign a document saying he can steal your concept and you won't sue! Why on earth would you sign that? Lawyer up.
posted by Jubey at 6:33 PM on October 21, 2013 [7 favorites]

You do need to talk to an attorney immediate.

From a pure general advice, rather than legal standpoint, the execution (and a lot of dumb luck) usually matters more than the idea, especially when it comes to tech startups. There are a few out there that all started from a truly unique and amazing idea, but for most startups, someone "stealing your idea" is not your primary problem. Chris Dixon's short post Why you shouldn’t keep your startup idea secret is a classic on this topic. Plenty of others have written on the theme as well.

Now this could get ugly, because the two of you know each other and nobody wants to invest in a startup that is being sued. So at least consult with a lawyer about various strategies for resolving this and their pros/cons.
posted by zachlipton at 6:34 PM on October 21, 2013 [4 favorites]

You'd most likely be on shaky ground. These things are very hard to prove.

If I were you, I certainly wouldn't sign anything, but I'd try to get him to put it in an email that he plans to pursue the idea without you and you're going to go your separate ways. (You can accomplish this by writing him an email saying that this is your understanding of his plan, and ask him to write back and confirm.)

You may be able to get a lawyer to write a nastygram saying that the pitch deck is your copyrighted material (you don't have to register something to get a copyright; if you wrote it, it's your copyrighted material) and he can't use it. Going farther than that seems to me like a waste of money and time.

IANYL, etc. Just spitballing.
posted by chickenmagazine at 6:48 PM on October 21, 2013 [1 favorite]

I am not a lawyer but I advise startups in these and similar matters with regularity. zachlipton is pretty much on the money. If you want to talk about it in more detail, MeFi mail me. The likelihood that you can do anything about this is quite small. Neither of you are likely to recoup costs associated with litigating on this front. If you want to message me, I am happy to discuss options in more detail.
posted by milqman at 7:05 PM on October 21, 2013 [1 favorite]

If it were me, I would totally bluff. Let him know you're not happy AT ALL that he stole your idea and there's no way you're signing anything giving up your right to sue him. The guy is clearly already concerned about this, so play on it. Tell him to go right on ahead and take your business idea, and he'll be hearing from your cousin, (or any friend of yours that he may have met even but knows nothing about) the intellectual property lawyer who is more the happy to work for free for as many hours as needed to knock this on the head.

The idea that you have free legal advice while he could burn through any potential profits just defending this will hopefully be enough to scare him off even attempting it in the first place. Tell him this if need be. He may think you're bluffing but chances are he won't have the balls to carry it through to find out. Play on his fears.
posted by Jubey at 7:37 PM on October 21, 2013 [1 favorite]

Seconding zachlipton. The idea is great, but the execution is what matters and the eventual product likely would not resemble the original idea anyway. I bet you could do a competing, identical product at the same time and still 'beat' him if you execute with a good team on board - in fact, if you couldn't, it's not a great idea to start with.
posted by kcm at 8:33 PM on October 21, 2013 [1 favorite]

Tell him to go right on ahead and take your business idea, and he'll be hearing from...

I agree with this general approach, but without the threat. I'd prefer a more ominous, "I'm not signing anything; do what you think is right," type statement.

Also, write down as much as you can about the meetings, who suggested and scheduled them, who called who, and who wrote what notes, basically the minutes of the whole operation until now.
posted by rhizome at 10:37 PM on October 21, 2013

The people who devalue good ideas are generally people who don't have good ideas but have something else, like money to invest, or the ability to execute. Even so a good idea isn't worth much without execution and some dumb luck.

Since I don't know whether your idea is actually good, I'm going to suggest that you chalk this down as a learning experience. First lesson is that you really need to have a written agreement sooner next time. Second lesson is that is that the original author holds copyright to their creations unless they explicitly transfer it. Whether or not this information is going to be of any use to you is another matter. Third lesson is to not give up yet. If the main disagreement is over equity terms, and you can't build this yourself, then maybe the best option is to get him back to the negotiating table. How? Well, as suggested above, you can convince him that it is going to be expensive and difficult to try to go it alone. Bluffing is going to be part of that.
posted by Good Brain at 11:23 PM on October 21, 2013 [1 favorite]

We had no contracts or written agreements of any kind.

And right now you're in the process of finding out exactly why that was such a poor decision. Education's wonderful, isn't it?

Better call Saul.
posted by flabdablet at 7:34 AM on October 22, 2013 [1 favorite]

Nthing the "lawyer up" advice.

While you may be SOL in this situation (though you absolutely do not have to give him any kind of legal release), you may also have formed a joint venture. This depends on your state's laws as well as the specifics of your situation. Even if that is the case, it may not be worth the cost of pursuing, especially if it's a he-said-she-said situation.
posted by melissasaurus at 1:51 PM on October 22, 2013

Is your idea something that could be a Kickstarter project, or some other crowd-funded project?
posted by at at 7:28 AM on October 23, 2013

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