Avoiding Key Legal Mistakes in Startup Companies: Part 4
Part four of our blog series on common legal mistakes made by startup companies focuses on the importance of obtaining and protecting crucial intellectual property (IP) rights related to your business through the development of comprehensive IP strategy. A Google search of the phrase “intellectual property” generally returns two types of news stories. On one hand, there are articles discussing the major issue of IP theft. On the other, articles highlight how companies are either growing their existing revenue streams or generating entirely new ones through the use of IP.
However, even with these resources out there, it can still be difficult for a business owner to gain more than a vague idea of what IP is and how valuable it can be for their business. The failure to obtain important IP rights and subsequently protect those rights is one of the most damaging mistakes commonly made by a startup business.
4) Develop a Comprehensive Strategy to Obtain and Protect IP Rights.
No matter what stage your startup is at, it is crucial to have a comprehensive IP strategy in place that addresses the following:
Identifies IP that is necessary to the business
How necessary IP will be created or acquired
How to protect internally developed IP and externally developed IP acquired by the startup
A comprehensive IP strategy that addresses these points will go a long way in both leveraging the startup’s IP so that revenue streams and market share may be maximized and in mitigating any damage caused by IP theft.
Identifying IP that is necessary to the business
Patents, trademarks, copyrights, and trade secrets all offer some form of IP protection, but identifying which IP is necessary to the startup requires the founders to ask themselves a series of questions. Will the startup be selling products and/or services? What brand will the company be offering products and/or services under? Does the startup have any inventions? Will the startup be generating content for consumers? These are only a few questions relevant to identifying the IP necessary to a business, but these questions lead to point two.
Creating or Acquiring IP
Once the startup has identified the IP necessary to its business, the next step is to go about creating or acquiring that IP. It is at this point in the process that many startup companies fail to acquire IP rights, which is a common legal mistake that can create major complications. Sometimes the startup does not obtain the rights to use certain inventions created by founders or employees. Other times the startup fails to file necessary documents with the appropriate government entity granting it valuable IP rights. Whatever the case, it is important to ensure that the startup possesses key IP rights and can exploit its IP in the marketplace. This can be achieved through assignment and/or licensing agreements as well as filing necessary documents with appropriate government entities to secure legally recognizable ownership of IP rights in the startup.
Protecting IP
At this point, we have determined the IP necessary to your business, and considered how to create it or acquire it. Now you must take the necessary steps to protect the startup’s IP from theft or disclosure, which includes:
Using nondisclosure and noncompetition agreements from the beginning of the startup’s organization to protect its confidential information.
Filing copyright registrations with the U.S. Copyright Office for copyrightable materials.
Filing applications for registration of trademarks or service marks with the United States Patent and Trademark Office.
Using applicable notices to signal the startup’s claim of ownership on copyrighted materials © as well as trademarks and service marks (“TM” or “SM” for to-be registered marks or unregistrable marks and an ® for registered marks).
Filing for any applicable patents with the United States Patent and Trademark Office.
Developing a comprehensive IP strategy for your business requires sound analysis and planning, but it can lead to numerous and valuable benefits. Be sure to consult with an attorney so that you can understand how IP plays a role in your business and how it can be leveraged to maximize revenue.
Contact us today with any questions you have regarding IP rights and your business.
Check out the whole series: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, and Part 8.