6 Strategies for Startups to Follow
Startup means innovative ideas, that means startup and innovation usually go hand in hand. When a startup comes up with an innovating idea, it rushes to launch its product or process in the market before someone else does. Every startup wants to launch their product or service first to be ahead of its competitor. But amidst this hustle and bustle, we often forget that we have not protected our most important rights that we have over our intangible assets, i.e., our IP rights which applies on our ideas, innovation and inventions. Protecting our IP assets is the most important step as without doing so, we will pave a way for our own loss.
Why is it important to protect our IP assets – one may ask. It is simply because it not only prevents unfair competition, but also helps a lot when it comes to obtaining investors fund or venture funds.
Down below are 6 Strategies for Startups to Follow for Their Intellectual Property Rights.
1.Identify your IP and how to protect it.
The first step is for you to identify what all in your business comes under Intellectual Property and can be protected under IPR (Intellectual Property Rights). Then you have to figure out how to get them protected.
How to identify what is worthy of protection? For that you need to first make a list of your intangible assets. After that, determine if your IP rights
- Need to be formally registered – Let me take an example to explain this, suppose that you have invented something that can be patented, to which you have given a name, a logo, a brand, it has a unique shape, colour combination or anything that can pose as a unique identification of your product or brand. You can get them trademarked.
Let’s take another instance where you have not invented anything but innovated an existing product and designed it in a new way; maybe you have changed its shape, size or other elements of its design. You can register its unique design to ensure that no one else copies your unique design.
- Can arise automatically – Let’s take another example here, we apply for a copyright when it comes to artistic works, but if we use a software to make the art, which is merged with a hardware, we can also get it patented.
An important point to be noted by founders of companies is that making a record of your ideas, marketing, photos, drawing, design or code writing as these can be copyrighted.
2.Prioritize which IP to protect
As a startup, you must know that you need not protect everything at the start only. Once you have listed down all your IP assets, you can take help of IP advisor and classify them under different IPRs as per their features. Then you can proceed to planning your budget for filing your IPR. By now you would be clear about when to file for what and in which countries. The most crucial ones will be filed at the start.
3.Sign a founder’s agreement
IP assets ownership can be a real struggle for a startup where there is usually more than one founder. Therefore, you must have an agreement, in terms of your relationship, in the founder’s agreement. No matter how many founders there are – 2, 3, 4 or more – they should all sign a founder’s agreement dividing their ownership. If any mishap occurs in the company, their individual rights over the company will stay intact and will also provide protection to all the co-founders. Each of them can have equal ownership on the company depending on how much they have contributed in terms of intangible assets.
4.Having an IP provision in your employment contract
It is a common practice to include in the employment contract that ownership of anything created as a part of individual’s employment will be transferred to the company. In other words, when you hire an employee, you make them sign an employability contract in which you must mention an IP provision. The IP provision must include that if the employee has created any IP while working in the company, its sole rights will go to the company as the employee developed the IP while working in the company’s projects. This applies on the founders as well, because it is important to make sure that there is a clear chain of title for any IP brought to the party at the time of establishing the startup.
5.Include confidentiality provision in your contract
To protect against disclosing of confidential information or trade secret, that should be included in the confidential provision of the employment or the consulting contract.
As a startup, you must add a confidentiality clause to your employability clause and also to your consultant contract and vendor contract.
One thing that you must keep in mind is that you must get an NDA signed by the third party. There is no bulletproof strategy to keeping information a secret and hence they can end up leaking. But NDA can help protect it. Even though there isn’t any bulletproof strategy, there few steps you can follow:
1.Maintain secrecy until decisions are made
2.Keep sensitive and valuable information protected
3.To check the IP licensing agreement or IP transfer agreement
If you want to allow third parties to use your IP, put it in a written license agreement. This agreement will, at a minimum, specify how long the license runs for, who can use the IP, where they can use it, what they can use it for, how it can be ended, and whether it can be forced to share it with other people.
On the other hand, if you’ve paid for something to be developed for your business, make sure you own or are appropriately licensed to use the IP.
Do not underestimate the role of IP protection in the growth of your startup because when you look for fund, IPO and sale, investor will access your IP strategy, the complete IP portfolio of your company. That is what increases the valuation of your company. IPR is the backbone of your company therefore it is extremely important to have a strong IP strategy.