In 1980 a certain 25 year old young man who had just began making inroads into the computer business struck a deal with a tech giant to develop an operating system. After adapting the operating system for what was to become the personal computer, he sold it for a one of fee of $50,000. But guess what? He did not transfer the copyright of the Tech Giant believing that other hardware vendors will clone the product. And so they did and he will become the sole provider of operating system for major PC manufacturers for decades. Today, he is one of the richest men in the world.
Around that time too, a young man, after taking an engineering education spun into making components with a lucrative premise “your music doesn’t sound as good as it could”. He re-imagined, redesigned and manufactured speakers, cables and other awesome musical instruments. With the emergence of his son, about two decades later, things were to change quite remarkably.
His young son Lee, would go on to meet a very influential music mogul and another, a Grammy award wining producer, well known for making impressive hip hop beats. He had to harness the entrainment value and sporting contact of the duo so as to launch his father’s company into the mainstream. He was so in a hurry he will then fly to LA to negotiate a deal with “nothing but a bachelor’s degree and no business experience except working for his dad”. He had no lawyer, financial advisers or accountant.
In the end he and the duo will go on to revolutionize the headphone industry and oversee a $300million business. But today that collaboration is no more. Out of share naivety, in negotiations not only did he relinquish ownership of the headphones business to the music moguls, copyright and trademark also belonged to them. Mr Lee had signed his world away and now the services of he and his father is no longer required.
The story above is a paradoxical example of how a business idea will go on to make one person the richest man in the world and the other a demonstration of how not to loose the world. So many of us dream up ideas that will either go on to become reality or just fizzle away into obscurity. For the former, sound decision-making is crucial.
To bring such dreams into reality most of us place a lot more emphasis on sourcing for funding without realizing the need to protect the idea itself. In Nigeria, copyright and trademarking of ideas and products cost no more than N200, 000 collectively. Understandably, many would rather just use the money to develop the idea further rather than pay it to some government agency.
Whilst funding is essential for product development, marketing and sales promotion, equally important is a need to ensure that intellectual property is rightly owned and jealously guarded. It is often the difference between making money today and making money tomorrow.
Venture Capitalists do not see intellectual property rights as a barrier to funding projects especially if that was already in place before they were approached. However, in performing due diligence, VC’s will more often than not acquire ownership of intellectual property where there is vacuum of ownership.
What’s the point singing a hit song today and in the next ten years the artist or writer of the song does not have any claim to royalties. In striking deals with moneybags or financiers it is important to engage services of professionals no matter how financially burdensome it might be. One can employ several means of protecting your interest even when there is no money to pay professional advisers. How about hiring them on a retainership basis. Such that you agree to pay them periodically for services rendered for a year. By signing a retainership agreement you can commit to spreading payments for over a year in exchange for calling up your advisers anytime you need to negotiate or make an investment decision.
It is also important to know at any one time whose advice you actually need. A business idea with budgetary inadequacies and the stage of seeking trademark and copyright registration will be better off hiring a lawyer than an accountant as having both might not be financially expedient. What about the funding stage? There is little value hiring marketing or PR experts when services financial advisers and lawyers are more suitable.
There was also this story of a popular online trading platform in Nigeria that had the domain names of various spelling of their often-misinterpreted names secured. I would imagine if I owned a website called desuwa.com then buying domain for deswa.com may not be such a bad ide too. A competitor may acquire deswa.com and redirect intending customers to my site to his.
No matter the money making potential of a business idea, it is very important to first and foremost protect your interest via intellectual property and brand propriety. Spending a few bucks on professional advice is a sacrifice worth making.
The article above appeared on the Punch Newspaper of February 28th 2013