IP Strategy

Innovators Wanted

Intellectual property is the foremost driver of startup company creation.

Developing a solid intellectual property (IP) strategy is essential for emerging companies preparing for market entrance. A sharp understanding and tactical plan for protecting your IP is critical not only before you start but also during the lifespan of the company. Good “IP hygiene” demands that IP is protected from the start of your enterprise.

What Is “IP Hygiene”?

The term “IP hygiene” refers to the practice of ensuring that legal ownership of the intellectual property at the core of the business is explicitly established. Ownership of IP assets should be so well documented that any questions that arise about IP rights are easily answered. Employees and consultants are almost always engaged to build upon the IP of an emerging company, as is often the case in software development endeavors. Practicing good IP hygiene significantly diminishes the likelihood that further development of assets by early stage contributors will escalate to litigation should disputes about ownership arise.

Protect your assets by clearly establishing IP ownership at the start of your business venture.

Trade Secrets and Patents

Trade secrets are the core ideas and inventions around which a business is built. The process of patenting an invention or trade secret includes providing a detailed description of the invention, submitting an application to the U.S. Patent & Trademark Office (USPTO) and other patent organizations around the world, proceeding with the review process and, if granted, establishing a patent. Unfortunately, the process typically takes several years. Once a patent has been awarded, the idea and/or invention is classified as a patent right.

Trademarks

There are two categories of trademarks: common law trademarks and registered trademarks. The trademark application process in the United States is similar to that of the patenting process. An applicant will define the trademark, file an application with the USPTO, engage in an application review process, and then, hopefully, within two to three years, receive trademark approval status. Both patents and trademarks receive a retroactive award date based on the date the application was initially filed.

Founder Tip: IP Owners Beware

It is important for founders and IP owners to be wary of the practice derogatorily referred to as ‘patent trolling.’ This practice occurs when a company that has a patent right, either through development or acquisition, enforces those rights against other businesses in an opportunistic manner, and typically without any intention to practice, manufacture or market the patented invention. Less disparaging terms for an entity that exists to assert patent rights include patent holding company (PHC) and non-practicing entity (NPE).

If you receive a letter asserting infringement of a third- party’s intellectual property, it is best to immediately seek the assistance of qualified counsel so that you can respond to the letter in a timely fashion. Delaying your response could be expensive if you are found by a court to be actually infringing the intellectual property. You should also consider taking steps to actively protect the intellectual property your company creates, e.g., by filing patent and/or trademark applications, registering copyrights, protecting trade secrets and being on the lookout for infringers.

Take precautions against getting tied up in IP litigation by making IP protection a foremost consideration when forming — and throughout the life of — your company. Litigation can be very time consuming, extremely expensive and can greatly inhibit an investor’s willingness to get involved in your endeavor.