A successful start-up business not only aims to generate profit — the team makes a difference toward their target market.
Have you observed how particular customers are, or even yourself, in selecting brands to meet personal interests? Have you noticed how mobile users compare iOs vs. Android? Or have you witnessed new systems, processes, or machines that are currently operating in your office?
That’s how intellectual property works — it shapes the way you think, perceive, standardize, select, and set preferences. However, many start-up businesses forget to consider the power of intellectual property. By not protecting their intangible assets, some companies will lose them.
This article will help startups to understand intellectual property in a theoretical and practical perspective.
IP Challenges of a Startup Business
The early stages of a new business venture are a blank slate that needs a concrete plan. During this stage, start-up entrepreneurs critically focus on developing the organizational structure of a company, building a core network, fortifying a core team, projecting channels, and optimizing key partnerships.
More often, intangible assets are overlooked, disregarded, and neglected. In the process of starting up a business, physical properties are more secure than the intangible assets, resulting in the imbalance of business interests and priorities for sustainable development.
On the other hand, industrial changes and trends challenge start-up businesses on investing tangible assets over intellectual properties. Undeniably, start-up owners fail to see the competitive advancements of protecting IP assets. This is due to the tedious and complex processes in IP ownership, with many wondering how much does patent cost and what does trademark litigation entail. Leaving their intangible assets unprotected, as a result, third party intellectual property issues arise, such as the risk of IP infringement.
To address the issue of IP challenges of a start-up business, you have to recognize the four kinds of IP, and to follow steps required to address ownership issues as to each.
4 Types of Intellectual Properties Your Startup Must Protect
#1 Inventions
Ideas for new products, services, or processes are inventions.
Inventions are new ideas fleshed out with specificity and technicality, which offer new utility without extensive testing and experimentation. Examples of inventions are secret food recipes, chemical formulas, business methods, software processes, and the like.
Moreover, the ownership of an invention is a contested aspect of intellectual property for many start-up businesses. The mistakenly accepted culture of company royalties is still practiced today, where a company receives full ownership of an employee’s invention. In this case, IP ownership may not be directly granted, without a written agreement signed by an inventor-employee and the company management, which stipulates the rights and conditions of those inventions to the company.
If you’re assigning your employee on a project, your start-up business has to execute a written agreement that lays down all terms and conditions of the IP ownership, who it will be owned by, and have it assigned to both of the parties.
Or as an alternative, J.D. Houvener, a Patent Attorney serving Houston, suggests that your employee must work with his or her invention after their duty hours, using their personal resources and utilities. Just ensure that their invention never manifests a conflict of interest to the nature of your start-up business.
#2 Confidential Materials
Generally, confidential materials are similar to inventions. However, these are business plans, new products, or service ideas.
In the context of start-up businesses, the Code of Federal Regulation provides that confidential information, or also known as non-disclosable confidential business information is a “privileged information, classified information, or specific information of a type for which there is a clear and compelling need to withhold from disclosure.”
Your start-up business can’t claim a mere concept as your “intellectual property” without fleshing it out. Hence, there are two efficient ways to preserve information as confidential:
First, your start-up business should execute Non-Disclosure Agreements (NDAs) to whom you agree in disclosing your secrets; and in return, they agree to keep them confidential and will avoid disclosure without your authorization. In good faith, apply NDAs to your future customers, investors, contractors, employees, shareholders, and the like to maintain confidentiality of your business information.
Second, trade secrets help preserve your confidential information. The law requires you to prove that such confidential information amounts to an economic advantage and that you took reasonable efforts to maintain its secrecy.
#3 Brand Names, Logos, and Trademarks
As a start-up business, building your brand reputation is crucial in gaining your customers’ trust and loyalty. While you expand in the market, the competition gets tougher as your competitors promote similar products. But there’s a cheat sheet to accelerate: create a meaningful and memorable trademark to win your customers’ hearts.
Today, most of your target market will set their buying preferences through brand names, logos, slogans, etc. And that’s how trademarks work — they significantly distinguish a product source against competitors. You can further monetize your brand’s identity through franchising, which will increase revenue and lead to reaching more customers nationwide or across the world.
#4 Works of Authorship
Works of authorship are intellectual properties related to expressed works of an artist, writer, singer, painter, game developer, or software engineer. Commonly, these are intangible assets protected by copyright laws to preserve the expressed idea of a published work.
Unlike patented inventions, the copyright laws only protect the expressed idea, rather than how an idea works. Meaning, the law doesn’t restrict you in expressing your thoughts through writing, as long as you don’t illegally imitate published works.
Under the copyright law, the author legally owns his or her artworks at the precise moment of their creation. However, the general rule is not absolute. In cases where your start-up business executes a written agreement between you and your client, make sure to stipulate your rights as the “author” of the work from the outset. This way, you’ll get the royalties you deserve.
Again, as a start-up business, always maintain proper protocol on the ownership of your intangible assets to avoid confusion of IP rights.
Key Takeaways
Addressing concerns at the early stages of your start-up business will help you have a sustainable awareness so you can prosper and attain your goals.
Winning strategies are achievable when a start-up business prioritizes IP rights and guards the brand against infringement. Intangible assets are the blood that streams to the heart of a business. Hence, here again are the four types of intellectual properties your start-up should protect:
- Inventions
- Confidential information
- Brand names, logos, and trademarks
- Works of authorship
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