Why is Protection of Intellectual Property Important for Startups?
(Written by: Priti Kaur Saini)
Intellectual Property (“IP”) is the lifeblood of a business and in the context of a startup business, IP refers to the original creations or inventions of the company. This may include brands, logos, product designs, inventions, literary and artistic works, and trade secrets.
In the initial stages, a startup is usually heavily involved in building infrastructure, hiring employees, and developing products/services and marketing campaigns for them. IP issues can therefore be easily overlooked or treated as a future worry, e.g., look into protecting IP after a product becomes successful. However, as a business owner (of a startup or otherwise), you must realise that IP constitutes a valuable aspect of your company’s assets, and the protection of intangible IP rights is critical to preventing the loss of exclusive rights to your own hard toil and effort.
It is quite common to see startup founders adopting a mark before any proper clearance search being conducted, only to find out that they have been served with a Cease-and-Desist Letter and the threat of a trade mark infringement suit and/or footing hefty damages and/or legal costs looming dreadfully over their heads. Another mistake that startups may make is that there is no proper documentation pertaining to the transfer of IP rights back to the business. For example, you paid your friend, an animator, to create an animation video for your startup without any agreement in place. You may think that since the video has been paid for by you, the copyright in the video belongs to you. Unfortunately, that is not the case as copyright generally belongs to the creator of the original work of authorship. Unless there is an agreement in place that transfers those rights to, or otherwise confers them on, you, there are in a situation where you think you own certain IP rights when you do not.
So, the sixty-four-thousand-dollar question is, where do I begin for my IP? Well, here are the first few questions that you should be asking yourself.
- Do I have Intellectual Property?
It would be prudent to document every idea or creation of your startup that you believe is valuable enough for protection. It could be something as simple as a brand name or a product design.
- Does my startup in fact own the IP?
You must be certain that you are indeed the owner of the IP. It is important to know what was done, who did it, where was the founding work done or even, what resources were used. Some founders may develop IP while in the employment of another company, in which case they must ensure that the employment contracts with their former employers do not stipulate any clauses entitling the employers to claim ownership of the IP. There is therefore the risk of being deprived of what you might think is rightfully yours as the owner of the idea or creation (as discussed above).
- Is there something I can do to protect it?
Yes! If you have an IP, it can be protected in several ways, such as:
- You may register your IP through legal means so that you can receive the proper credit and rights to your work, as well as enhance your startup’s commercial credibility. This legal protection also means that if someone steals or misuses your IP, there is recourse available.
- You should have agreements in place when you source for certain ideas or creations from people outside your startup so that ensuing IP rights of value to the business are transferred to you wherever possible.
- You should get your contractors to sign Non-Disclosure Agreements (NDAs) before disclosing new inventions or innovations you are engaging with them to develop or manufacture, so that they are prevented from stealing your IP for their own use or selling it to your competitors, and in doing so publicly disclosing your invention and thereby denying it the required novelty for any valid patent registration.
Final words: It is therefore important to ensure that IP issues are well-addressed before you establish your startup. Not only will you insulate your startup from legal issues which may follow later on, but your startup’s commercial value will also be enhanced by attracting investors and other stakeholders when your IP is well-protected.