In for a penny, in for a pound…
By Stephanie White, April 18th, 2017
I hear it all the time … “I can’t afford to protect my intellectual property.” Let me tell you that the reverse is true for a startup … you can’t afford NOT to protect your intellectual property! If you’ve decided to take the leap and embark on a start-up adventure, then you will want to do everything in your power to succeed.
Early stage companies are typically built on a great idea and a lot of hope. These companies have not yet had the opportunity to acquire tangible assets or to build significant sales revenue (if any!). Consequently, the value in these companies is often in their ideas and their ability to create products/services from those ideas. Potential investors and partners won’t take a second look at a company if those ideas are not protected, or protectable. The assumption is that all new companies have a great idea, however, investors and partners alike need to know that they will have a defensible competitive advantage over other companies before they join in developing and growing such early stage endeavors. It’s all about mitigating risk.
Market exclusivity typically requires strong intellectual property protection. But what does that mean for a start-up, with limited resources and a nascent technology? I have identified below four general areas of focus for valuable IP protection that are important to early stage companies.
Avoid costly complications:
- Know the competitors’ IP so you know where or what the company has freedom to practice without risk of infringement;
- Ensure that employees and contractors assign their IP rights to the company upfront;
- Scrutinize all third party agreements, including so-called “standard” agreements (e.g., confidentiality agreements), to ensure that they do not restrict or damage the company’s IP rights
- Teach employees about IP
Be proactive:
- Create a working environment that fosters innovation
- Identify inventions early and keep quiet until they are protected
- Reassess IP regularly to ensure it remains consistent with the company’s commercial and business plans
Use appropriate IP protection:
- Don’t rely solely on patents: consider trade secret protection and remember the value of brand protection through trademarks
- With respect to patents, invest in quality applications rather than a lot of applications
- Invest in IP protection in as many jurisdictions of commercial relevance as possible, while also considering strength of protection available in each jurisdiction
Look for opportunities to fund IP:
- Government grants for startups that support IP expenditures
- Monetize company IP (e.g., in non-commercial fields of use, or jurisdictions; or IP that has become irrelevant)
Finally, talk to your intellectual property advisor! For early stage companies in particular, it can be beneficial to select an advisor who can act as a virtual in-house professional, with a good understanding of the company’s business goals. This provides both the company and the IP advisor the opportunity to proactively and strategically grow the value of the company’s IP portfolio.
Ultimately, because of their limited resources, early stage companies may need to be even more tactical than large corporations in how they handle their IP. However, investing the time and money to ensure that the company’s IP is properly protected will pay dividends in the long run!
For more information please contact:
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