The Most Important Intellectual Property Considerations for Startups
The beginning stages of introducing the brand name and business of a new organization is a challenging process that cannot be overlooked in regards to intellectual property assets.An article from VentureBeatnews online cites the five biggest mistakes that startups can make regarding intellectual property, which leads us to illustrate the five important practical considerations for startups with valuable IP assets.
1. Not infringing on a Competitor’s IP rights.
Specifically in the context of trademarks, any word, phrase, design or symbol can constitute a valid trademark, so if your mark happens to create a “likelihood of confusion,” for the potential average consumer, between your mark and another, the company that filed first could prevail in an action against you.
This is one of the most important issues for startups, because if it’s not discovered before a founder gets attached to a name, or mark, and spends money building up the goodwill behind that mark, it can all be lost if a third party company asserts such claims against you. This scenario has also given rise to many “trademark bullies” in recent years, who often prey on vulnerable startups (see our article, BLOG POST on Bullies).
Startups should retain legal counsel early on to avoid these risks and to obtain the confidence necessary to move forward. Entrepreneurs can do a preliminary search in the USPTO.gov database of trademarks on their own.
2. Ensuring your prior employer has no claims to your IP rights.
If a founder of a startup established the company’s IP capital while moonlighting at a prior employment, several issues can give rise to an action against you by a former employer. An employee’s use of the employer’s resources, technology, know-how, or even telephone, while creating a concept for a startup can be a problem.
Founders should pay close attention to their employment agreements and be sure not to take any of the employer’s property with them upon termination of the employment. This includes customer data, documents, and files. It’s also wise to maintain a diary of progress if your invention is somewhat related to an employer’s business practices, noting resources used, and timing of progressions.
3. Assigning IP rights of the founders to the company.
Because IP is typically best registered before most startups are legally formed, they exist in the name of the individual owner. Intellectual property, much like real property, must be effectively transferred by a written document and recorded with the USPTO.
This is especially risky if an inventing co-founder leaves the business early, and takes the IP rights with him. Moreover, if the IP was created by a third party developer or designer, the rights must be properly contracted to ensure the ownership is duly transferred to the business.
4. Ensuring the proper dealings of Employees and your IP assets.
Employees should be subject to strict confidentiality terms regarding their employment, and should also formerly assign all intellectual property to be created is attributed to the company. Chasing down third parties to establish a clear chain of title just before a merger, acquisition, or VC agreement, can easily be avoided.
5. Developing and implementing an IP protection strategy.
It’s important to sit down with an experienced IP professional to evaluate and identify all of your potential IP assets. Intellectual Property is a new and highly specialized area of law, which requires a dedicated and learned professional.
Many aren’t aware that IP includes three very distinct bodies of federal law, some of which are exclusive of each other, and some that overlap. Many may feel a pricey patent is their best bet for success, and while that’s certainly true for some entrepreneurs, it’s never a one-size-fits-all, and a trademark or copyright may be the more appropriate or valuable asset.
In any case, it’s important to make sure that you contact a professional truly dedicated to IP law, like the attorneys at Levine Law Group. We’re truly passionate about entrepreneurs and even more so about intellectual property. Having come across an alarming amount of misinterpretation of the law by “experienced” professionals in our field, we are confident in our abilities in this highly technical and creative field.