IP Protection for Technology Startups

Intellectual property (IP) is one of the most valuable assets of a tech startup. Through IP, a company can bring innovative products and services to the market. IP can also help protect a startup from the possibility of other companies stealing its concepts and inventions.

A startup’s IP is also a big consideration for investors and possible acquirers. They want to ensure that the startup has complete control over the ideas, branding, and code that it aims to utilize. Without IP, a startup has little leverage in the market.

When startups begin to scale, they also start to share more information with their partners, vendors, and clients. Securing their IP becomes even more crucial. Technology startups should be aware of all possible IP issues they may have to encounter.

IP Evaluation for Tech Startups

Every tech startup should first evaluate its core assets. This is how it can decide on the type of IP protection it needs.

There are startups that may defer protecting their IP as they think that the process is complex and expensive. Some startup founders may choose to instead focus on raising more capital or hiring employees. This may potentially hurt the company down the line, as it may lead to the startup forfeiting its IP rights as somebody else may use or claim its IP.

The process can be made simple, however. The first thing that a tech startup should do is to evaluate its value proposition and the IP assets tied to that value proposition. This will also allow the startup to raise enough capital in relation to its core assets. This also means that the company can focus on protecting the IP that it needs the most.

Startups must also prepare their disclosure schedules, which potential acquirers may seek. This is usually a list of all IP, important contracts, employee information and agreements. All this will come in handy when identifying which assets need further IP protection.

Startups should also be made aware that there are many types of IP. Patent protection is one way to protect its assets. However, there are also many types of non-patent IP that can be valuable for tech startups. These include its cybersecurity policies, trademarks, copyrights, and the protection of development processes.

The Different Types of Intellectual Property

The United States Patent & Trademark Office (USPTO) grants patents and registers trademarks. The U.S. Copyright Office at the Library of Congress registers copyrights.

Patents generally provide the best type of protection for a startup’s products. They prevent other companies from making, using, or selling the product, depending on how it is described in the patent claim.

Technical inventions, such as chemical compositions like pharmaceutical drugs, mechanical processes like complex machinery, or machine designs that are new, unique, and usable in some type of industry can be legally protected by patents.

Copyrights are another form of IP. They pertain to original works of authorship. These include artistic, literary, or intellectually created works, such as novels, music, movies, software code, photographs, and paintings that are original and exist in a tangible medium, such as paper, canvas, film, or digital format.

Startups should also consider applying for trademarks. They protect the symbolic value of a word, phrase, symbol, or name that identifies your goods or services. Aside from trademarks, service marks should also be looked into. Similar to trademarks, they also protect the symbolic value of words and symbols but are used to identify a company’s services.

Trade secrets are also another form of IP. They allow the owner to take legal action against anyone who breaches a confidential agreement. This means that when a startup protects its trade secrets, it can then prevent other companies from stealing its processes, programs, and even client information.

Non-Disclosure Agreements (NDAs), also called Confidentiality Agreements, may also be used to further protect a startup. This allows a company to show information to a third party but obliges the third party to keep all the information confidential. All of a startup’s employees and consultants must sign an NDA to ensure the protection of company information.

Key Takeaways

Knowing a startup’s IP and how it is protected isn’t just important for tech startup founders and owners. It’s also important to its investors and possible acquirers. All of a startup’s current IP needs to be disclosed to all investors. This is why it’s good practice for startups to keep copies of all their patents, trademarks, agreements, licenses, software, and even contracts.

A tech startup must evaluate its core assets so it can decide on the types of IP protection that it needs. Though some startups choose to defer IP protection, they should instead understand that this can be problematic down the road. Instead, what a tech startup should do is evaluate its value proposition and the IP assets most crucial to that value proposition.

IP not only allows the company to bring its products and services legally to the market, but it also protects the startup from the possibility of other companies stealing its ideas. This is why IP can be a tech startup’s most valuable asset.