I have an idea for a simple device that addresses a common problem. I'm sure it could be manufactured cheaply and sold for a large margin. I think I have an idea for effective distribution.
My main concern is protecting the idea to keep knockoffs from removing the margins.
What steps can I take to protect the profit?
Your first step is to check with the US Patent office's online database. That will be the first thing that an intellectual property attorney will do, so best to check before hiring one to essentially Google for you. If you search all of the potential terms for your invention and still come up blank, then start hunting for an IP Law firm. If you can afford them Fish and Richardson are in many major US cities, although they are more for tech inventions/IP.
The next step is to follow the advice of your new attorney.
Patents cost about $15K to file, just so that you know. There is an art to it and it's hard to tell whether they are worth it.
In my experience, what matters 95% of the time is whether you can build a great product. Execution. Having a patent is pretty useless. Except in those 5% when litigation (or the threat of) kicks in.
Some of the challenge of patenting anything is that everything has already been invented (sort of :-). So it's not so easy to patent what you really think is important. You can make defensive patents, but again, it will cost a lot of money to defend (think $500k minimum).
If you're facing threat of knockoffs and don't have the option to patent (too pricey, not patentable, whatever), the other main way to protect your margins and build a sustainable business is by branding.
Marketing studies and lots of examples show over and over that brand names that have name recognition and an emotional connection with customers can command a big premium over generic products, even if they are otherwise pretty similar. Think premium potato chips vs basic, or apple computers vs dell.
I suggest getting some marketing/branding advice, and asking yourself what's the unique story and emotional connection that you can establish with your customers. That's something you can defend and maintain, and can never be imitated/copied outright.
Patents are not helpful, unless you are dealing with a drug or a chemical. They can scare away some competition, but it is not the small competitors that you should be concerned with anyway. Trademarks or other IP (intellectual property) might be useful.
What you need to do is make sure you have a great distribution channel that can give you an advantage once the competition begins. Due to globalization and modern manufacturing techniques, you can expect real competition within months of having a successful product.
If your product will generate you significant returns in a short time, it might be worthwhile starting the process, while knowing that it will only last for a short time. In that case, don't start fighting the competition with a price war that will wipe out any profits... Accept the fact that your business has a limited life span.
You might be able to get rid of some competition by using a strategy called judo economics. What it means is using your opponents weaknesses to your advantage. The classic example of that is selling recycled ink cartridges for printers. HP can kill that market by lowering the price for ink, but since 80% of their profits come from the ink, they will loose more money from the discount then from the market share they are loosing right now. There are books on the subject if you are interested in learning more about it. It is important to note that your competition may not be rational, and may go after you despite the fact that they will loose more.
You might consider filing a provisional patent. These are relatively inexpensive and can extend your runway (18 months, I think) while you refine the idea. But you should do some preliminary patent searches to ensure your idea does not infringe. As you get closer to market, it's a good idea to pay for a "right to use" or "infringement study". These can be expensive but demonstrate you've done proper due diligence not to infringe on another product.
Depending on the product and market, it might not make sense to protect your product with patents. You might be better off getting to market first and establishing your brand.