Intellectual Property: The Most Valuable Asset of a Technology Startup
Today, Intellectual property can be the most valuable asset of a technology startup company. So, protecting IP is essential to obtaining venture capital…
September 20, 2017 at 04:11 PM
4 minute read
The original version of this story was published on Law.com
Today, Intellectual property can be the most valuable asset of a technology startup company. So, protecting IP is essential to obtaining venture capital funding warding off unfair competing.
Tim Harris, Partner at Bird & Bird, shared with Inside Counsel the five most critical IP strategies that a startup should implement. A startup usually lacks significant assets other than its IP, according to Harris, but aspects such as a startup's founder, culture and timing may be important in determining its success or failure. IP like the idea and brand upon which the company is built is certainly a factor that can make all the difference.
“A startup that proactively identifies, protects and manages its IP is likely to be in a much stronger position to attract investment capital than one that takes short-cuts,” he explained. If appropriate protection for IP is not sought and obtained, it is all too easy for a competitor to walk off with a startup's crown jewels.”
For instance, a venture capitalist is likely to invest in and give a higher valuation to a company that has given thought to and take appropriate steps to protect its IP. Without appropriate IP protection, a company is inherently vulnerable to losing its IP to a competitor or a potential investor with no compensation for the hard work or value that it has created.
Per Harris, the top five most critical IP strategies a startup should implement are:
1. Seek advice – IP is a highly specialist topic but there is a lot of free or low-cost advice available to start-ups. Harris advises speaking to a professional about what IP your start-up should prioritize and suggestions for strategies to deal with it.
2. Consider patent protection – A patent isn't necessarily essential, or even possible, to protect any idea. But a patent can be a valuable asset and useful offensively and defensively so it's worth considering at an early stage. A patent search is also recommended to minimize the risk of infringing third party patent rights, and the cost, time and uncertainty that can bring.
3. IP and your brand – Determine whether your brand may infringe an established brand before investing time, money and energy in building it. Then, ensure that you protect your brand. A registered trade mark is relatively cheap, quick and straight-forward to obtain and makes enforcement easier and cheaper than relying on unregistered rights.
4. Think confidential – Confidentiality is at the heart of any startup's thinking, along with the tension between needing to disclose information to obtain funding, recruit, advertise and so on. But, the adverse consequences of failing to protect critical information can be so severe it is always worth prioritizing confidentiality.
5. Contracts and IP – Under English law, paying a contractor or consultant to do work is not enough to obtain copyright in whatever is created. Deal with the company's IP rights up front in all contracts to avoid expensive arguments later.
So, what are best practices tech startups should follow to protect their IP?
According to Harris, a startup should always ensure that it has considered its IP and has a protection strategy for it. Different mechanisms may be available to protect an idea, all of which have trade-offs such as cost and time but also important decision-making.
“If a startup has taken suitable advice and pursued an appropriate IP protection strategy, this can make all the difference between a successful fund raising and starting again,” he said. “Most importantly, ensure that non-disclosure agreements and appropriate contracts are used whenever potentially valuable IP is being disclosed or created.”
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllUS Reviewer of Foreign Transactions Sees More Political, Policy Influence, Say Observers
Pre-Internet High Court Ruling Hobbling Efforts to Keep Tech Giants from Using Below-Cost Pricing to Bury Rivals
6 minute readPreparing for 2025: Anticipated Policy Changes Affecting U.S. Businesses Under the Trump Administration
Senate Panel Postpones Vote on Reconfirmation of Democrat Crenshaw to SEC
Trending Stories
- 1Recent Decisions Regarding the Telephone Consumer Protection Act
- 2The Tech Built by Law Firms in 2024
- 3Distressed M&A: Mass Torts, Bankruptcy and Furthering the Search for Consensus: Another Purdue Decision
- 4For Safer Traffic Stops, Replace Paper Documents With ‘Contactless’ Tech
- 5As Second Trump Administration Approaches, Businesses Brace for Sweeping Changes to Immigration Policy
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250