This article is written by Devashish Jaiswal, pursuing a Diploma in Intellectual Property, Media, and Entertainment Laws from Lawsikho.com.
A startup isn’t a piece of cake. People behind successful startups face a lot of hardships mostly financially. As we all know a startup doesn’t instantly earn you money. Apart from that, a startup requires much more effort, dedication and time as compared to a job. Even if one person does all this despite facing so many hardships. A person might see a fall in his startup if he isn’t aware of the proper strategies and intellectual properties required for a tech startup.
The author through this article aims to provide information regarding strategies for tech startups with regard to tech startups. This article consists of information about intellectual properties that will prove helpful for someone thinking about a tech startup.
What are tech startups?
A startup company is a term used to describe a business model that is focused on finding a repeatable and scalable model. A tech startup is a company that aims to bring technology products or services to the market. These companies are typically focused on a specific industry or product area. During the dot-com bubble i.e. when a large number of dot com companies were founded, the term was often used to refer to companies that were already established but were still in their early stages of development. Due to this background, many people consider startups as only tech companies. However, as technology becomes more prevalent, the essence of startups is more about innovation and growth.
Why do tech startups need protection?
Many startups can’t afford to risk losing their IP rights. Getting basic IP protection doesn’t require a huge sum of money or a team of attorneys. To get basic IP protection small legal research is required with standard fees which are not too expensive but the benefits are huge. Your intellectual property rights are secured by formal registration. This protection can help you avoid getting sued in the future. When you gain ownership of a copyright or patent, the presumption is that the property is yours. When someone else infringes on your intellectual property, the courts will presume that your IP is yours unless the other party proves otherwise. Getting an IP rights holder is an important step in protecting yourself from infringement suits. Getting an IP rights protection plan protects your startup from costly infringement lawsuits later. The key to competitive advantage is intellectual property. For example, if you protect your invention with a patent, then no one else can make/produce the same product without your permission. This is the process of acquiring and protecting intellectual property that can be used to advantage in the marketplace by creating your own image. If your startup gets into a novel idea of software or hardware that’s ready for commercial use and you haven’t protected it yet. Then your entire business could be at risk as IP protection provides stability and security for investors too.
Strategies for tech startups to safeguard themselves
An intellectual property issue is just one of the many factors that a startup will face when it comes to starting a technology company. There are a number of issues that intellectual property can avoid when it comes to getting a product to market before someone else does. Protecting intellectual property can help you get the most out of it. Here are some strategies techs can use to safeguard their interest as well as their startups.
1. Keeping your work by the employers separate from your own idea
It is scary to give up your current job and start a startup for no pay. However, it is also very important to remember that working on your own idea while working for someone else can be dangerous. This may establish a conflict of obligations which can put intellectual property at risk. Most companies have various employment obligations, such as the obligation to assign or refrain from competing for the rights or intellectual property of their employees. If your side project is not approved by your employer, it is a bad idea to do it. Most people don’t want to disclose their new venture to their employers. This can be a problem if the project is related to the employer’s business.
2. Don’t let other people claim ownership of your IP or your company
Having a co-founder agreement is very important. It can help you avoid making many mistakes down the road and it can also help preserve the relationship. This informality often leads to people submitting funding applications together, which can be very confusing and awkward for co-founders. When you become a co-founder, you have to agree with the terms of your relationship with him or her. Doing so can cause problems down the road. Having a co-founder agreement is very important. It sets out the terms of your relationship with one of your partners. A mutual agreement with co-founders is essential. Below are some queries which one should clear in an agreement for avoiding internal conflicts.
- What percentage of the company is owned by the founders?
- What are the responsibilities of each founder?
- If one founder leaves, what happens to the other founder’s shares and how much commitment is expected by a founder?
- What are the key decisions that the business has to make?
- Who will make the decisions, the CEO or will be mutually decided?
- How will a founder be removed from his or her job due to certain circumstances?
- What will be the basic investment of each founder?
- What will be their decision regarding sales?
- What happens if the founder isn’t living up to expectations? How do they resolve the issue? (A favoured approach is for any disputes to be resolved by confidential binding arbitration).
- What are the goals and visions behind the startup?
Understandings that are informal or vague are bound to get out of hand. Keep in mind not to share information like the stakes of the company or any idea that might bring any harm to you or your company. Keep records of all the discussions and ideas from where they came from to avoid future conflicts. If something changes, make sure to communicate clearly in writing what you would like to share with them. This will help avoid making a mistake and undermining their idea. If your idea is worth a billion dollars, then it is cheaper and more cost-effective resolving these sorts of issues beforehand than filing for an IPO or sell the company.
3. Getting contributors to assign their IP rights to the company
Many different parties may be involved in the formation of a company. So the parties involved may contribute something or the other. A company should get the IP assigned to them through a contract in order to use them without hindrance. The owner of intellectual property rights holds that right until the contract has been terminated. In some states, such as California, employees can keep their inventions on their own time(which is apart from the company’s work) as long as they do not use company equipment, supplies or any other facilities. A written agreement is essential for ensuring that all rights and intellectual properties are assigned to a company. Establishing the ownership of the intellectual property rights of a startup is very important. Doing so will allow the startup to take advantage of the potential of the intellectual property market. Any intellectual property created before the formation of a company should be transferred to the corporation in exchange for shares or consideration based on mutual understanding. All employees should agree to the terms of the Confidentiality and Invention Agreement which acquires assignment of intellectual property as a condition of employment. Independent contractors or consultants should also sign agreements stating their obligation to assign their intellectual property to the company.
An agreement that states the company’s rights over inventions and discoveries is a must. As well as a non-disclosure agreement is required for anything that pertains to any ideas, inventions, or discoveries.
4. Evaluate your core assets and decide on the type of IP protection you need
Ever wonder why tech startups are reluctant to protect their intellectual property? Startups are prone to losing their intellectual property rights for their hard work, as many of them hesitate to invest in intellectual property protection. Companies should evaluate their core assets and think to themselves if they should or shouldn’t protect their intellectual property. Some simple and cost-effective measures can help minimize the anxiety of protecting your company’s core assets. Many companies believe that patent protection is the best way to protect them. However, it is often not the best way to protect their intellectual property. Instead, they should consider other forms of IP such as trade secrets, trademarks, cybersecurity policies and copyrights. In case someone doesn’t know what kind of protection is best for them then one should consider an IP lawyer or anyone else who has good knowledge about intellectual property.
Intellectual property protection which a startup can use according to their needs
Below is a list of intellectual properties with a description of their use:
A patent is a protection that a company or individual has against the use and sale of their patented product. The key issues in determining if a patent is needed are: the concrete embodiment of an idea, formula or product, the nature of the invention must be novel and the reason why it should be patentable.
Copyrights cover original works of authorship, such as art, advertising copy, literary works, articles, musical works, cinematograph films, software, etc. A copyright gives the owner the exclusive right to make copies of the work and to prepare derivative works (such as sequels or revisions) based on the work. A person can register his copyright through this website in India
A trademark is a symbol or word that an individual uses to identify or distinguish their goods or services. Some well-known trademarks are Coca-Cola, American Express, and IBM. You obtain the rights to these trademarks by actually using them in commerce. You don’t have to register a mark to get rights to it. However, federal registration can give you some advantages. In India, you can register trademarks through this website.
A trade secret is a valuable asset that can be used by startups. It can be maintained for as long as its value is derived from its secrecy and maintains its confidentiality. A trade secret right can be used to prevent the unauthorized use or disclosure of confidential information. Trade secrets can range from computer programs to customer lists to the formula for Coca-Cola.
Confidentiality agreement (NDA)
Non-disclosure agreements are often referred to as NDAs. They are agreements that prevent the disclosure of confidential information. These agreements are drafted by a lawyer.
If you operate a website that uses the internet, you should have good terms of service agreement in place to prevent unauthorized users from accessing and using your site. Knowing how to protect your intellectual property is often a material issue that needs to be disclosed in order to attract investors and acquirers.
Geographic indications are becoming more prevalent in the industry. They help identify the geographical origin of goods and services. A geographical indication is a sign that a product has a certain geographical origin. A geographic indication is a type of designation that identifies the origin of a product. It can be used to identify the quality of the goods and their origin. Many agricultural products have characteristics that are derived from their local environment and have a premium quality that is unique to them.
Geographical indications are granted protection under the TRIPS Agreement. Part II of the Agreement sets out the minimum standards for the protection of geographical indications.
Some of the products that have been identified with geographic indications include; Darjeeling Tea, Kangra Tea, Alphonso Mango etc. Many of these establishments have gained valuable reputations due to their impeccable quality. If their reputations are ever jeopardized, they would be exploited by dishonest commercial operations. The former is easily deceived into buying products that are not worth their while. The former are usually left with a tarnished reputation.
Industrial design protection provides protection for a variety of shapes, configurations, and surface patterns, which can be applied to a functional article. Industrial design improves the design appearance and increases the aesthetics of the 2D or 3D design of the product.
According to Indian Law, industrial design protection is an exclusive right granted to individuals who have the right to make, use and sell the articles that contain the protected design to a specific person. Design protection rights provide protection of your design for 10 years which can be renewed once for another 5 years. A person in India has to register for this protection in India.
The main and basic requirement to qualify for a design patent is that it should be novel and original, it should be functional, it should be non-obvious and there should not be any prior publication or disclosure of the design.
Tech startups are for persons who either have a lot of investment as well as a lot of experience. But there are some brilliant minds who think of tech startups but lack financially. At many times companies/persons trick people who come up with great ideas for their startup. It’s better to be safe rather than being sorry later. Apart from that, lawsuits regarding conflicts of Intellectual Property can be costly. So one should get IP protection for their startup as per their need. You never know how much your startup can yield you. So it’s always good to protect your idea which can fetch you a lot of money rather than getting your unprotected idea stolen.
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