Secure Your Intellectual Property – What Every Startup Should Know

Intellectual property is typically among the most undervalued assets that a startup possesses, and it’s up to the founder and team to take proactive measures to safeguard the company’s intellectual property (IP) from the earliest days of its existence. Learn what steps you need to take now so that your valuable IP will remain safe and secure and help contribute to a prosperous future for your business.

Long-term strategy to protect IP

Planning for the future is one of the most difficult parts of starting a new business. The immediacy of the moment takes over when you’re dealing with startup logistics, and there are so many variables up in the air during the early life of a company that making decisions based on so many unknowns can be paralyzing at times.

When it comes to IP, many entrepreneurs simply don’t have the experience to see what kinds of issues can arise years down the road. New startup founders are often unable to recognize the breadth of the value of their IP, which can cover everything from specific processes to branding materials and even pure ideas. The best thing you can do for your IP protection now and for the future is to treat it like a core function of your business and devote the appropriate resources to it.

The dangers of ideas belonging to another entity

One common pitfall for new entrepreneurs is failing to completely separate their work on the nascent startup from another company they are already employed by. This can have disastrous results, because if your employer has any valid claim to any ideas, industry knowledge or processes that you may take to your new startup, you can be sure this will come to the courts the minute you become successful enough to be visible, and to have value worth suing for.

The first step in guarding against this kind of action is reviewing thoroughly the terms of your employment before you begin any work on your idea. You need to know if you are subject to non-compete terms or confidentiality agreements and if so, to what extent. Also, avoid doing any work on your startup idea during your employment hours, or using any of your employer’s resources. This can include anything from using your company laptop to jot down ideas, to talking to a potential partner about your startup on a phone where you also take work calls. In general, keep everything related to your new venture on devices that are completely disconnected from your current work.

What your employees bring from their past employers

As your startup gains traction and you begin to employ or partner with others, another concern related to past employment arises. Businesses can also take legal action against you if any employee you hire brings IP to your venture that the former employer believes it has a right to. Many of the same precautions you need to take with regard to your own former employer need to be applied in the case of hiring new employees. First, make sure you check the references of any people you are bringing on board. Ensure that they are not subject to any non-compete agreements that could get you in trouble. Also, get your employees to affirm in writing that they are not using any proprietary or confidential information from a former employer in their new role at your startup.

Types of IP and legal protections for your business

There are many different types of IP that can be valuable to your business, and the best way to be proactive in securing your assets is to identify which types of IP are most likely to be important to you. Learn as much as possible about the risks and necessary protection measures for each sooner rather than later. Some of the most common types of IP that you will encounter as a startup owner include:

  • Patents. Being granted a patent provides you with broad protection and an exclusive right to the invention, but the application process is time consuming and expensive when compared to other types of IP protection.
  • Copyrights. Copyrights protect the expression of an original work, such as a book or piece of music, and they are granted automatically when the work is produced.
  • Trademarks. Trademarks are elements such as names, logos, domains, etc. that can be registered for exclusive use, provided they are not already registered as in use by another entity.

No one is expecting you to have the knowledge of an attorney who specializes in IP law, but you do need a basic understanding of what measures need to be taken for the good of your business.

Seek sound legal advice even when small

Running a startup often feels like a bootstrap endeavor, and there are some instances where it makes sense to take care of things yourself when the budget doesn’t allow you to hire an outside contractor. The mechanics of creating the business entity are probably things you can handle yourself – see for example how simple it is to form a corporation in California. But IP law is an area that you definitely need to read up on, and perhaps seek expert counsel, even if you think you are still too small to need it.

Turning to qualified legal counsel for IP advice will cost some money, but it doesn’t have to be very expensive, especially early on when you are unlikely to be embroiled in complicated legal proceedings. Investing a little in solid advice now will help you set up a long-term strategy that can save you from potentially ruinous issues in the future.

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.