Intellectual property (IP) is having its moment in the sun, but often not for the best of reasons. For every story heralding the importance of IP in business, there are multitudes more indirectly doing the same thing when discussing the latest lawsuits over copyright or patent infringement or co-founder feuds over who holds the right to their creations. Too many startups make early-stage mistakes regarding their IP that can at best hinder and at worst sink their burgeoning businesses, often due to nothing more than oversight or ignorance on the subject. Here are some of the top mistakes made by startups.
Undefined IP Ownership
Most entrepreneurs would rightly believe that the ownership rights to their work belongs to them, but what happens in cases where they turn to outside contractors to do work for hire? Most would believe that the work they paid for belongs to them, but the law isn’t quite so clear. To avoid this mess, you should make sure that outside contractors are signing work agreements that outline the details of work ownership and renounce the contractor’s ability to make claim to the work as their own.
Many entrepreneurs start their businesses as a side project from their day jobs, and subsequently leave to take on their own project full time as it starts to take off. With this success comes the potential that former employers can claim the foundation work of your business as their own. When starting a business while in the employ of another company, be cognizant of any employment contracts you might have signed when you started and what they say about ownership rights of work created while you’re employed; while some agreements might be limited to work done on company time or with company property, others claim a broad ownership of anything you create during that period.
Unusable Brand Names
Coming up with a great name for your company that can set you apart from your competitors is important, but it can be a waste of time if you can’t use it in your business. The ability to register a brand name with the state and register a domain for your company does not automatically confer the right to use that name to conduct business. If your name is too close to another pre-existing business, you could receive a cease and desist letter demanding that you stop use of the name or face legal action. Before you go through the trouble of registering a brand that you ultimately can't use, conduct a search on the U.S. Patent and Trademark Office website for registered trademarks and talk with a trademark attorney to avoid any missteps.
Confusing IP Types and Protections
Many people have some base of knowledge as to what IP is and know the names of different types, but are unsure about the differences between the types and the types of protection each offers to the rightsholder. Before making any sort of filing for your business, make sure that you have done the necessary research on the different types of IP and how they apply to different works. Taking the time and resources to talk to a lawyer may seem like a waste so early in the life of your business, but it is a worthy investment to avoid big mistakes that can do greater damage in the long term.
Too Much Invested in Patents.
As important as patents are, too many inventors place too much of their faith in receiving a patent for their creation. In order to be awarded a patent, an invention must be "a new, useful, and non-obvious method or process, described in enough detail that it can be reduced to practice by a person with the relevant technical expertise." While that patent will hopefully prevent others from copying your work, it might not prove worthwhile to rely on that patent as your ticket to fortune and glory, as the patent process is slow and expensive.