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Identifying your intellectual property (IP) and developing a strategy is the first step when creating a business. Yet, many entrepreneurs delay even thinking about IP until it’s too late, because they do not believe they have anything worth protecting. But this is a mistake.
IP is a significant piece of a startup's value and being savvy ensures credibility with potential investors and strategic partners. For example, while patents are not the only type of IP, disclosing too much too soon about an invention may dramatically impact the ability to protect your product. And of course a trade secret only has value if it’s secret.
Here are three ways to start thinking about protecting your IP. Keep in mind, I am not an attorney but these are just insights that have worked for my clients and me. For IP and other legal decisions, it is best to consult with a licensed lawyer.
Start with the name. All companies have some IP worth identifying. For instance, a company and its products’ names are valuable assets and critical building blocks to a brand and therefore, should be protected. So do your research and secure the rights before someone else does.
Check search engines, along with state and federal trademark databases. If the name isn’t taken, it may be wise to snag it. If you don’t, you may end up either spending a lot down the road on litigation, securing the rights to the name or changing the business name or marketing materials.
Don’t rely on a handshake to transfer IP. Cash-strapped entrepreneurs often default to working with independent contractors using bids, estimates or invoices for quick, affordable transactions. Unfortunately, without a contract, a startup may not own the work even if the bill was paid in full.
For example, a startup client paid for a promotional video but worked from an estimate that did not include any terms concerning who owned the source video files. Inevitably a dispute arose when the company wanted to make additional videos and was told they did not own the rights to the original file and had to pay the video company to manipulate or buy outright. Moral of the story? Have a standard contract that clearly articulates who owns what rights.
Keeping ideas secret might slow you down. Do not mix up telling someone your idea (which entrepreneurs seem to fear more) with actually leaving valuable IP unidentified and therefore unprotected. Ideas by themselves are not actual IP. It is only after you express those ideas by means of execution that IP is created and must be identified.
Non-disclosure agreements (NDAs) may be requested to help ease entrepreneurial angst about discussing ideas. But remember many professional investors will not sign NDAs, because it may restrict other investments. If investors nix the NDA, entrepreneurs should not reveal every last detail at the first meeting without NDA protection. Often enough of your secret sauce can be withheld to protect your IP while outlining your business or product, resulting in progress for your business idea without IP loss.