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Legal Stuff : Starting a new Venture ?

How does the entrepreneur protect the novelty of his concept ? The first requirement is caution: do not disclose it to anybody until you have taken the steps ….


Each business has a CTP (‘Critical Transactional Path’), from inception to liquidation or sale. The CTP actually starts well before the first day’s trading as the seed of a project, venture, sole trader, enterprise or joint venture is often sowed long before the physical structures and requirements are put in place. Such seeds & thoughts are more often than not sown, shared or implemented without much or any thought, such actions fueled by the burning desire that drives entrepreneurs – not a moment to be wasted, the customers and success is visualized and risks ignored!

The primary risk for any entrepreneur is the challenge of balancing the wish to share the brilliant idea with friends and family with the danger of doing so & losing the initiative due to a lack of ‘intellectual ring-fencing’. It is hard to convince any entrepreneur that his friend today can be his foe tomorrow and that money changes people. It is therefore a good idea early in these exciting days of the birth of a new idea and business to take cognizance of the wise words of Julius Caesar: ‘Festina Lente’ – ‘Hasten Slowly’!

The budding entrepreneur, who ignores these wise words and throws caution to the wind in his enthusiastic endeavour to launch & get off the ground his project as a matter of extreme urgency, will in most cases rue that approach and have lots of time to repent at leisure. The very seed, thought or concept that gives rise to the ultimate enterprise is what is known as intellectual property (‘IP’), a non-tangible that must be protected at all cost & mainly before any disclosure whatsoever be made, even to your closest friend or relative. Doing so will not only place the concept at risk but may well result in completely eroding the underpinning requirements for statutory protection thereof be it copyright or in the form of a trade mark, design or patent registration – novelty is the very foundation of such protection and this is lost, sometimes irrevocably, by making the concept public, be that verbally or by means of any other form of communication.

How then does the entrepreneur protect the novelty of his concept? The first requirement is caution: do not disclose it to anybody until you have taken the steps we will be discussing in this document. The next step is to reduce it to writing, the main reason being that copyright does not vest in ideas until such time as it has been reduced to substance. Any such written document must display the required ‘marking’ such as ‘©’ and/or ‘™’ (where applicable) in order to provide the owner of the concept with the necessary protection and to advise outsiders that the owner has identified his IP. It is strongly suggested that in conjunction with that the entrepreneur requires each and every person with whom he discusses his concept to sign a non-disclosure and confidentiality agreement (‘NDA’). I am sure you’ve seen these from time to time and some of them can be very (almost too) comprehensive, but you can have an effective NDA that is one page – the crucial issue is to have one & to have it signed before any disclosure whatsoever is made.

The challenge of course is when you as the entrepreneur (‘Mr’ Small Guy’) go to see the ‘big guns’ for funding, investment, etc. Who are you to ask them to sign anything – you must be joking! Well here are some alternative approaches or a combination thereof: (1) advise the parties to the meeting at the outset that the meeting is held in the strictest confidence and the ideas your about to share with them is your intellectual property; (2) The aforesaid & ask them to sign a NDA; (3) #1 & if they refuse to sign a NDA, send them an e-mail immediately after the meeting (with a ‘read receipt’) confirming #1                  

Contact :

Adv Louis Nel

B.Comm, LL.B. LL.M.

Corporate Legal Facilitator

EM louis.nel@corporateoptions.co.za


37 Halifax Street
, Bryanston. 

P O Box 239, 
, South Africa 

PH 27 11 463-4556 
FX 27 11 463-4557 
MOB 27 83 679-4556


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