Start ups - How to Protect your IP Rights!

Intellectual Property rights are one of the most important assets of a start-up. In today’s competitive and innovative environment, Intellectual Property (or ‘IP’) can really help you to create a sustainable and defensible differentiator for the company. Owning IP rights helps your business to grow by creating a protective barrier as regards competitors.  

Intellectual property is used to describe the creation of the mind. The world of intellectual property rights can sometimes be difficult to get to grips with, given its intangible nature and combination of different types of rights. However, such rights can often be crucial to your business and in some cases, can be your most valuable business assets. 

IP rights can include intangible assets such as copyrights, patents, trademarks, geographical indications and designs. There are vastly different types of IP rights which can be valuable to large companies as well as to start ups.  

Unfortunately, very often the top priority of startups is not necessarily to protect their IP at an early stage. 

The mistaken notion that only execution matters is key - with the misconception that time, effort and money need to be put into driving the startup forwards - with a focus on developing and innovating, rather than securing the basis for their innovations.

However, protecting your IP will save you time and severe (and sometimes irreversible) damage. Securing your IP rights will help you to secure market share and revenue by preventing other companies from stealing or replicating your concepts, brands, and inventions etc. This will also help you to have leverage on the market in which you operate. Furthermore, it goes without saying that for investors, IP is a major consideration: they will want to know that your start-up has control over all of its assets - such as know-how, ideas, code, and branding.  

Protecting your IP rights will ensure you that you are protected against replication and theft and will make you more attractive to investors.  

We therefore thought it would be helpful to set out here 5 key steps you should take to make sure that your IP rights are protected:   

1.Confidentiality

First of all, you should make sure that you sign an NDA (a confidentiality or non-disclosure agreement) with investors but also with employees and any other third party having access to your ideas, trade secrets or know-how. Sometimes, things such as ideas or know-how is not necessarily possible to protect by filing for an IP right, so an NDA is the best, and cheapest option.

Indeed, when you develop a product or idea, you will often have to share confidential information with experts, investors, freelancers, employees etc. These parties are aware of the product or ideas you are creating and can reveal it to others unless they are contractually prohibited from doing so. 

You should document all your meetings and all information you share with others - in writing. NDAs are also essential prior to you proceeding to register a trademark or especially a patent, to ensure that your ideas are not released into the public domain.

NDAs will also ensure that the appropriation of confidential information regarding your innovations is restricted. Moreover, when you share any know-how or business secrets, it is even more important to sign up to an NDA with the recipient, because - as we mentioned above, that information will not usually be capable of being protected by any other IP right.  

In the event of a dispute, if you have signed an NDA with a third party, you will be in a stronger position to show that you had certain rights in respect of any information you shared under that NDA - which can be a powerful tool should you need to take action against a third party who may be using your ideas as a springboard for their own competing activity.

In short, we suggest the following tips and tricks:

• All the parties sign the NDA before sharing any information. 

• The NDA is in writing (do not rely on oral promises because you will not be able to prove it later on) 

• The NDA clearly indicates the information you are sharing with a third party. 

2.Register your IP rights!

NDAs alone will not be enough to protect your invention or brand. It is fundamental that you start to register any applicable IP rights as early as possible.  

Patenting your invention in one of the most effective ways to protect it because it will provide you with a monopoly right on the product which is based on your invention.  

However, you should also protect your brand by registering for trademark. Start-ups usually make the mistake of forgetting about protecting the brand they are building - but it is almost as important as protecting the product itself. Quite often, startups forget to run clearance searches on their name prior to trading - meaning that they start to build up goodwill in a name that might actually be infringing another business’ trade mark - or when they come to register their name, it turns out that there are other prior rights preventing them from doing so. This then means that the startup has to go through the costly and inconvenient process of rebranding their business at a key stage - something which could be avoided with early action.

We suggest the following tips and tricks for patent applications:

• Identify countries where you want to do business and therefore where you would need protection.

• Take care to understand any local rules or requirements, including whether you can rely on any existing treaties for international protection.

• Seek advice from a patent attorney at an early stage - ideally on with expertise in your technical field. 

For Trademark you should: 

• Check that the name or sign you wish you use is available before you start to use it. 

• Identify countries where you want to do business and therefore where you would need protection.

• Make sure you define a list of the goods and services you would want to register your trade mark for, and ensure this is broad enough to cover off any potential evolutions in your business.

• Seek advice from an expert to guide you through the process - and once your trademark is registered - do not forget to monitor it!

3. IP Agreements

There are a few different agreements and points that should be checked in relation to your IP.

Separately from the NDA that we mentioned at point 1 above, it is really important when starting your startup to ensure that you do not have any contractual restrictions with a previous company or employer. Check your old agreements to see if any non-compete or non-solicitation clauses are still in force. You should also review any provisions related to IP or Confidential Information in those agreements to ensure that they are not incompatible with your startup plans. If in doubt, it is certainly useful to get the view of an expert to avoid any potential breach of contract claims.

You can also enter into various IP agreements - such as licensing in IP from another company is a good way to get your company started as your own proprietary solution may be in development. Also, licensing out your IP - which essentially authorizes third parties to use it, subject to certain conditions - is a good way to protect your IP while entering into partnerships or collaborations with other companies. Also, IP licensing could be a great source of revenue for your start-up. 

IP licensing agreements will allow you to keep a lot of control over who can use your IP assets, how they can be used and for how long. Licensing agreements are really protective of your rights and can be versatile.

4. Monitor and take action!

Large companies such as Amazon or Google spend billions of dollars to protect their IP rights and to sue anyone who might infringe them.

Once you have taken all the steps above to make sure that your IP is protected, it is also really important to monitor your IP rights - to ensure they are valid and up to date, and also to carry out surveillance of your IP to make sure that no one is infringing it.

An example of this is carrying out trade mark monitoring - which we wrote about in a previous article - here. If you do discover someone is potentially or actually infringing your IP rights, then it is important to take swift action against those offenders. If you do not do so, in some countries, you might even lose some of your rights for failing to act.  

 5. Seek Legal Advice

There are many legal options available for start ups to protect their IP - depending on the startup’s specific circumstances.

Each start up runs and operates differently and has its own products, ideas, innovations, set-ups and services. Therefore, there is no single solution that can be applied to all start ups across the board. 

At first, IP concepts may seem overly complex. An experienced lawyer will help you to understand all of your options. It is essential that you are aware of  how your scope of protection works, how you need to make and follow-up on any registrations - and also if you plan to enter into an NDA or licensing agreement, that you understand how it works. What specific rights and responsibilities would you have under the terms of any agreement, and what protections are afforded to you and your start up under the agreement if things go wrong?

In conclusion, protecting your IP is essential for start-ups. Start-ups often neglect IP protection with the idea that their product and business strategies are most important.

However, this can result in some irreparable mistakes. Protecting your IP rights - and monitoring them - should be one of the most important things in your start-up, as it will provide you with the best possible basis on which to grow and develop your business.

Feel free to contact us if you have any questions or would like some advice to make sure that your start up’s IP rights are effectively protected. 

Article by the Team @ Gerrish Legal, July 2021